What was wrong with the &quot;Poll tax&quot;?

Original post by yeah yeah

Hi

Question in the title. Was it not a fairer system than the council tax system we have today? (Curious because I'm too young to have lived under it lol)

:smile:

???

Well, how do you define fair? If you define it by progressivity, then no, it was not, as the poor paid more (the tax was levied depending on the no. of people living in a house, and given that poor people tend to live in larger families they paid more as a consequence). However, if you consider it only in theoretical terms, and consider fairness to be when everyone pays the same proportion of their income, then yes, it was, as the tax was flat - that is, the rate did not vary with the income of the taxpayer.

And a tax can be a bad idea even if it is fair. Morality doesn't really come into economic decisions.

Reply 3

mabrookes

Original post by Markleberry

Well, how do you define fair? If you define it by progressivity, then no, it was not, as the poor paid more (the tax was levied depending on the no. of people living in a house, and given that poor people tend to live in larger families they paid more as a consequence). However, if you consider it only in theoretical terms, and consider fairness to be when everyone pays the same proportion of their income, then yes, it was, as the tax was flat - that is, the rate did not vary with the income of the taxpayer.

And a tax can be a bad idea even if it is fair. Morality doesn't really come into economic decisions.

What, how can it be fair in terms of it being proportional if it is a flat rate and not based on income - that is the exact opposite of proportional as those with lower incomes pay a bigger proportion of their income. What am I missing, as that seems fairly simple maths to me.

Reply 4

Jez RR

I remember the iniquitous thing being that students or people on benefits got a reduction, but still had to pay 25% of the poll tax. I had to pay a quarter the rate my dad did, living in his house, but his monthly salary was ten times what my giro was. Twenty times, probably.

Given the hand-to-mouth nature of living on the dole at the time, where you didn't have enough to buy food for the whole period your giro covered anyway, it was a piss take.

As I understand it these days, if you are on benefits or a student then you are exempt from Council Tax.

(edited 12 years ago)

Reply 5

Original post by Markleberry

And a tax can be a bad idea even if it is fair. Morality doesn't really come into economic decisions.

Taxation isn't an economic decision, its a political one.

Reply 6

Original post by mabrookes

What, how can it be fair in terms of it being proportional if it is a flat rate and not based on income - that is the exact opposite of proportional as those with lower incomes pay a bigger proportion of their income. What am I missing, as that seems fairly simple maths to me.

It was proportional insofar as everyone paid the same amount relative to the value of their house. See, in taxation terms, 'flat' means everyone pays the same proportion - not necessarily the same amount. For example, if you had a 20% flat tax, a person with a house worth £100000 would pay £20000, whereas a person with a house worth £500000 would pay £100000.
The only reason it wasn't flat was because reality got in the way; the poor ended up paying more because of the higher occupancy per house.

Original post by Quady

Taxation isn't an economic decision, its a political one.

If it influences production, consumption or distribution, then it's an economic decision, as it influences the economy.

(edited 12 years ago)

Reply 7

L i b

19

Original post by Markleberry

the tax was flat - that is, the rate did not vary with the income of the taxpayer.

As has been pointed out, there was a series of measures to compensate those on low incomes, the disabled and so forth.

I think that's a reasonable system really. Even if you want to make taxes redistributive, doing so at a local level when you're also doing it at a national one isn't necessarily a good thing.

Reply 8

Original post by L i b

As has been pointed out, there was a series of measures to compensate those on low incomes, the disabled and so forth.

I didn't say there wasn't. That doesn't mean it wasn't a flat tax.

Reply 9

Original post by Markleberry

If it influences production, consumption or distribution, then it's an economic decision, as it influences the economy.

No it has economic outcomes.

Otherwise there wouldn't have been a u-turn on the poll tax would there?

Or more recently the 10p tax band or the cider tax increase.

Otherwise you can say my use of electricity on my PC and washing machine right now is an economic decision. In reality its not, but has outcomes for the economy.

Reply 10

Original post by Quady

Otherwise you can say my use of electricity on my PC and washing machine right now is an economic decision. In reality its not, but has outcomes for the economy.

Well it is; you're choosing the allocation of your time and (if you pay the 'leccy bill) money.

Reply 11

yeah yeah

OP

Original post by Markleberry

Well, how do you define fair?

Council taxes pay for council services, right? And your rate is set in terms of the value of your house. That's what I think is unfair because what bearing does the value of your house have on how much council services your household consumes?

For example: How is it fair that, say, a person living on their own but in a large house has to pay more than ten people living in a smaller house? Clearly the ten people living in the smaller house will be using council services more than the one person in the larger house - how is the current system fair?

Reply 12

mabrookes

Original post by Markleberry

It was proportional insofar as everyone paid the same amount relative to the value of their house. See, in taxation terms, 'flat' means everyone pays the same proportion - not necessarily the same amount. For example, if you had a 20% flat tax, a person with a house worth £100000 would pay £20000, whereas a person with a house worth £500000 would pay £100000.
The only reason it wasn't flat was because reality got in the way; the poor ended up paying more because of the higher occupancy per house.

Ah ok, I was thinking of it in a different way :smile:

Reply 13

Jez RR

Original post by yeah yeah

For example: How is it fair that, say, a person living on their own but in a large house has to pay more than ten people living in a smaller house? Clearly the ten people living in the smaller house will be using council services more than the one person in the larger house - how is the current system fair?

Possibly because if people's economic circumstances are forcing them to live ten to a small house, then they would generally have less disposable income than one person in a large house?

Reply 14

Clumsy_Chemist

10

Original post by Quady

No it has economic outcomes.

Otherwise there wouldn't have been a u-turn on the poll tax would there?

Or more recently the 10p tax band or the cider tax increase.

Otherwise you can say my use of electricity on my PC and washing machine right now is an economic decision. In reality its not, but has outcomes for the economy.

It's both political and economic surely. When you tax people, you want to avoid losing their votes, and you want to avoid reducing demand and investment in the economy. George Osborne wants the economy to grow and for the Tories to be reasonably popular. It's nonsense to say that tax decisions are purely political or economic.

Reply 15

Original post by Clumsy_Chemist

It's nonsense to say that tax decisions are purely political or economic.

So setting VAT on domestic gas/electric at 5% and on food at 0% is partly an economic decision as they are price inelastic products?

:s-smilie:

Reply 16

Clumsy_Chemist

10

Original post by Quady

So setting VAT on domestic gas/electric at 5% and on food at 0% is partly an economic decision as they are price inelastic products?

:s-smilie:

There must be some economic calculation behind it :colondollar:

Reply 17

Mbob

12

Original post by yeah yeah

Council taxes pay for council services, right? And your rate is set in terms of the value of your house. That's what I think is unfair because what bearing does the value of your house have on how much council services your household consumes?

For example: How is it fair that, say, a person living on their own but in a large house has to pay more than ten people living in a smaller house? Clearly the ten people living in the smaller house will be using council services more than the one person in the larger house - how is the current system fair?

You could apply that logic to any tax though - I don't think many people would suggest we should just pay a fixed "defence" fee or a fixed "education" fee.

Council tax is unfair because it taxes you based on the value of your property which may be unrelated both to your ability to pay, and to your use of services.

The poll tax was fair because everyone paid for the services they were using (although arguably some services scale more by household than by individual), but unfair because it takes no account of ability to pay.

A local income tax is fair because it takes account of your ability to pay, but unfair because some people pay a lot more than others for the same services.

Take your pick. It comes down to whether you think local services should be funded from taxation to whether you think you should pay a fee, like the TV license or the gas bill.

Reply 18

Maker

Original post by yeah yeah

Council taxes pay for council services, right? And your rate is set in terms of the value of your house. That's what I think is unfair because what bearing does the value of your house have on how much council services your household consumes?

For example: How is it fair that, say, a person living on their own but in a large house has to pay more than ten people living in a smaller house? Clearly the ten people living in the smaller house will be using council services more than the one person in the larger house - how is the current system fair?

People choose to live in a big house, if they want to pay less, move to a smaller house, its their choice.

Reply 19