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Council Tax burden three times higher for the poor than the rich

 The Labour Party and their union paymasters often talk as if reducing Council spending, in order to allow lower Council Tax, was an attack on the poor.

What are the facts? The latest analysis I can find is one for the financial year 2008/09. It is from the Office of National Statistics.

It says:

Council tax (and domestic rates in Northern Ireland) is regressive, even after taking into account council tax benefits and rates rebates. Although households in the lower part of the income distribution pay smaller absolute amounts - average net payments by the bottom fifth of households are half those of the top fifth - when expressed as a proportion of gross income, the burden decreases as income rises. Council tax in Great Britain and domestic rates in Northern Ireland represent 6 per cent of gross income for those in the bottom fifth but only 2 per cent for those in the top fifth.

I believe there is a moral case for low taxation in general. It is the same as the moral case for freedom. Forcibly appropriating the honestly acquired earnings of our citizens is an activity that should be kept to a minimum. The moral case for capitalism is something the Americans have devoted rather more attention to than we have in recent decades (see Gary Cooper clip from an Ayn Rand film above which I think takes it a bit too far but conveys the general point pretty powerfully.)

But the moral case for lowering Council Tax is especially strong. The Council Tax freeze will benefit the poor three times as much as the rich. It is something the coalition Government should be given more credit for.


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