Council Tax has struck a deep emotional chord amongst the public, not quite to the same extreme that the Poll Tax did, but the fact that so many pensioners are willing to get locked up over it suggests something is going on.
It is a very silly tax that doesn’t seem to achieve anything and it is curious that both the Tories and Labour have lined themselves up to defend it with their dying breath. Strictly speaking, it can hardly be described as a property tax as (in England at least) properties haven’t been revalued since 1991, meaning that it has very little to do with the actual value of your property. What’s more, the 8-band system means that effectively it is capped: those who own the most expensive properties pay the least proportionately. A random, regressive tax is pretty indefensible.
But one thing is does not do is hurt poor pensioners. Prof Iain McLean has calculated that just 1.2%-2% of the population is â€˜an owner-occupier with below 60% of median income living in a house in Council Tax bands E to Hâ€™ (the majority of whom will be pensioners). What’s more, pensioners on a fixed income are entitled to Council Tax Benefit. The still smaller minority this does not apply to could (whisper it!), always downsize to a smaller property.
Don’t tell Help the Aged however. Apparently, council tax affects people “below the poverty line” – how? They claim that an elderly couple with just Â£182 per week income “could end up paying the same level of Council Tax as their neighbours, a young and wealthy couple with an income of tens of thousands”. Yet, according to entitledto.co.uk, (which the Help the Aged website links to elsewhere), that couple won’t have to pay any council tax at all.
Help the Aged also bleats about how council tax has increased out of step with pensions – but that just means that more pensioners are entitled to council tax benefit. It then goes on to cheekily complain that very few pensioners are aware they are entitled to council tax benefit. Well of course they aren’t if organisations like Help the Aged go around pretending they aren’t entitled!
Pensioners like Rooney and Hardy are being goaded on to make themselves martyrs not because of a serious issue that is effecting thousands of pensioners, but because a number of relatively comfortably off pensioners resent paying a tax that pays for basic local services. These women really don’t appear to realise what they are letting themselves in for by going to prison; they probably believe the Daily Mail’s claims that it is akin to spending a couple of weeks at Butlins.
The Lib Dem local income tax solution I’m ashamed to say is to let pensioners off the hook entirely and simply increase the tax burden onto that wicked rich young couple with an income of “tens of thousands.” The fact that those wealthy young wasters may be bringing up a family and have an enormous mortgage to pay is neither here nor there.
The irony is, pensioner poverty is a real issue, but council tax is a total red herring. The income-poor, asset-poor pensioners (IPAPPs) have been let down by a system that has squeezed them throughout their lives, left them with nothing to call their own and then does not support them in their dotage. Money spent on subsidising the relatively wealthy pensioners is money that can’t be spent on the truly needy. The IPAPPs are our allies and a warning of what millions of younger people have to look forward to under the current system.
Assets should count for something – the current government was wrong to put so much stock into the pensioner credit and thus create a disincentive to save. But it’s time we recognised that the culture of encouraging people to lock all their assets into property causes all kinds of social problems; specifically a restriction on the housing supply which screws over the following generation, depopulates villages and towns and subsequently leads to increased pressure on local public services that old folk depend on. Emotive arguments about turfing old people out of the family homes notwithstanding (and what about the emotive argument about people not being able to get a foot on the property ladder?), pensioners and their families benefit from property taxes. The issue is making them fairer and taking off their harshest edges, not scrapping them.