2020 Tax Commission calls for councils to pay for half their spending from local taxes
The 2020 Tax Commission, a joint project of the Taxpayers Alliance and the Institute of Directors, calls for huge cuts in spending and tax to boost growth. Matthew Elliott writes about it on ConHome this morning.
Part of the mix they propose would see more tax at a local level, with councils less dependent on central government handouts. For localism to be a reality it must include the management of money. Otherwise councils are the paid agents of Whitehall. The report argues that half the net spending of a council should be paid for from locally raised tax - rather than 17% at present.
The politics of their plan would be greatly helped by the context of tax going down overall. But the power to impose a Sales Tax would come on top of retaining VAT. They would also allow a Local Income Tax.
The Commission argues that increasing the ratio of tax raised locally would help keep tax down due to tax competition. There would be a readily available "external yardstick" of what happens in other towns.
The report points to OECD research that such tax competition has had an important impact on helping poor areas catch up with rich ones.