Sir George has warned his constituents that proposals for a new local income tax, published last week by the Liberal Democrats, would mean an average household in Test Valley paying £628 a year more in tax. A local income tax has also been suggested by the Labour leader of the Local Government Association, in its response to the Government’s review of local government funding.
The plans for a new local income tax to replace council tax were announced by Liberal Democrats on 12 January, yet analysis by Conservatives has exposed the fact that the average household would pay more under the system.
Currently, households in Test Valley pay an average council tax bill of £1042 a year. To raise the same amount of money, this would require a local income tax rate of 4.3%. Yet a household with one person on average male earnings and one on average female earnings would end up paying a yearly local income tax bill of £1670 – which even after getting rid of council tax, would still entail an additional £628 a year in tax.
“We already know that taxes on income have been hiked up by Labour through higher National Insurance. Now, LibDems want to increase tax bills even more – first by introducing a national top rate of income tax of 50 per cent and also a local income tax of 4.3 pence in every pound. This could mean £628 a year extra for a typical two earner household in Test Valley.
“Local income tax raises many questions that have not been answered. What happens to those wealthy individuals who live in large houses, but have so arranged their affairs that they pay no tax? What about properties owned by people based overseas, or properties owned by companies? They could all escape, leaving the rest of us to pay more. Pensioners would not escape either – any savings income would be taxed to the hilt by Inland Revenue too.
“Rather than robbing Peter to pay Paul, the Government needs to end the fiddled system of local funding imposed by Whitehall, and give back the money it has snatched from Hampshire. We need a fairer deal not ever higher taxes.”