Charles Kennedy launched the Liberal Democrats’ manifesto yesterday and already his ‘flagship’ policy of replacing the council tax with a local income tax is a shambles. At his press conference, Mr Kennedy was clearly unable to answer the most basic questions about the local income tax.
Kennedy Confusion. Asked who would be worse off, a floundering Mr Kennedy said: ‘You are talking in the region of £20,000, err. . . yes. If you take a double income couple, £20,000 each, that's what you are talking about. . . £40,000’ (Liberal Democrat press conference, 14 April 2005), before Party Chairman, Matthew Taylor, rescued him on the detail.
Later his Treasury spokesman, Vincent Cable, had to correct Mr Kennedy’s assertion that the tax-take would be ‘no less’ than under the council tax when the Lib Dems own figures state that it would be £2.4 billion less in 2007-8.
It’s no wonder that even senior Liberal Democrats have rounded on Mr Kennedy with one reportedly describing his delivery as ‘irritatingly wrong’ (Daily Mail, 15 April 2005).
As The Sun puts it this morning: ‘What a pathetic shambles the launch of the Lib Dems manifesto turned out to be’ (15 April 2005).
Soaring bills for hard-working families
Liberal Democrats refuse to publish details of how local income tax will affect working families across the country. Their Treasury spokesman, Vincent Cable, said: ‘Well almost by definition we can't publish a print out of the details affecting you know tens of millions of people, all we can do is to give the contours’ (Liberal Democrat press conference, 14 April 2005).
The Facts: Using the latest household income data from the Office of National Statistics, and local government finance data from the ODPM, Welsh Assembly and Scottish Executive, the Conservative Research Department has analysed the impact of the local income tax on every council in the country. The research shows:
• A typical working family in England in 2005-06 would pay a LIT tax bill of £1,701, compared to an average council tax bill of £1,009. This would mean a typical working family paying over £600 a year more.
• Working families in only one council in Britain will benefit – everywhere else, they will lose out.
Mr Cable has already admitted that many homes would pay more under local income tax. He said: ‘If there are two full-time earners in the house, there would be more tax’ with the new tax starting to bite for families with combined salaries ‘in the mid £30,000s’ (Evening Standard, ‘Lib Dems admit tax reforms would hit families on £35,000’, 21 Sept 04).
• Many areas will face even higher bills, reflecting the inefficiency or efficiency of the council, their spending decisions and the local funding settlement from central government. Liberal Democrats admit that: ‘It may be that areas which currently have very high council taxes will have a slightly higher local income tax rate’ (Liberal Democrats, Labour’s unfair council tax: the facts, Sept 03).
• Under local income tax, in houses with more than two adults the total tax bills would soar. In the words of the Liberal Democrats’ local government spokesman, Lord Newby: ‘More people would pay local income tax than council tax’ (Lords Hansard, 9 February 2004, Col. 943).
• Students who take jobs to boost their incomes would be eligible for the local income tax –deterring them from working and increasing student debt. An estimated 73 per cent of student nurses now have to do part-time work to supplement their income while studying (Royal College of Nursing press release, 8 July 2003). Students and student nurses are currently exempt from council tax.
• Liberal Democrats want to levy business rates on second homes. ‘To ensure owners of second homes pay a fair contribution to local services, we would levy our equivalent of business rates, local site value rates, on the second home’ (Liberal Democrats, Scrap Council Tax: Liberal Democrat plans to replace council tax with a local income tax, January 2004).
• The complexity of local income tax would also mean extra costs for employers, as they would have to administer different local income tax rates for each employee who lived in a different local authority. Liberal Democrats claim they oppose council tax rises.
• Yet Liberal Democrat MPs and peers voted three times with Labour to support higher council tax bands and the rigged council tax revaluation (Lords Hansard, 10 Sept 03, Col. 339; Lords Hansard, 17 July 03, Cols. 976-80; Hansard, 10 Mar 03, Col. 126).
Liberal Democrats support a barrage of new local taxes on hard-working families, pensioners and local firms – including congestion taxes, parking taxes to shop and at work, a dog tax, a hotel tax, development tax, 4x4 tax, VAT on new homes – on top of local income tax. So a vote for the Liberal Democrats is a vote for higher taxes.
What Conservatives will do
Conservatives will:
• Halve council tax for millions of pensioners. We will introduce a new 50 per cent discount for those who live in households where the adults are aged 65 and over, up to a maximum of £500 a year. This will be on top of Labour’s one-off £200.
• Scrap Labour’s plans for new higher council tax bands, a rigged revaluation and a supplementary council tax.
• Cut back the unfunded burdens, regulations and red tape that have forced up council tax.
• Ensure fairer funding from Whitehall, by introducing greater transparency over grant distribution.
• Deliver a fully-funded settlement for local government, with an above-inflation increase for local councils, and significant increases for schools, police and health and social services.
The choice at this election is clear: value for money and lower taxes with the Conservatives, or higher taxes and more waste under Mr Blair and the Lib Dems.
Promoted by Gavin Barwell on behalf of the Conservative Party, both at 25 Victoria Street, London, SW1H 0DL. Printed by the Conservative Party.
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