Friday, 17 February 2012

Death & Taxes

Friday 17th February

Who wants to pay more tax?

Not me, that's for certain.

So it was with a measure of trepidation that I attended the most recent Full County Council meeting in order to vote on a Council Tax increase for this year.
The background to this is all to do with the centrally requested 'Council Tax Freeze', where Eric Pickles suggested that councils did not raise council tax this year in return for a central grant. I'm not an accountant, but I'm advised that this grant was a one off and effectively bound the councils to continued loss making for several years (or deficits in local governent parlance) in return for so doing.

However, what has happened is this. The Leader of the County Council, David Hodge has elected instead to decline Mr Pickles' offer and instead raise this year's council tax by 2.99% and put the case to the members of the council last week.

'Career Suicide', you might think. Well, possibly. But I happen to think that Mr Hodge has got this decision right and I'll explain why.

Firstly, the grant offered by Mr Pickles doesn't even cover inflation. Which essentially means that the taxpayer's existing tax cannot even cover what has already provided by the council with evcerything else remaining equal. Linked to that are savings being made by cost cutting exercises - not always popular with service providers or service users - in order to accommodate inflationary pressure, but it isn't enough.

Second is the actual quantum. The increase as proposed and carried last week worked out at an extra 64p per week on a Band D property. In fact, the difference between what Mr Hodge proposed (2.99%) and what the opposition parties agreed was a 'fair' increase (2.5%) wass in fact 10p per week on a Band D property.

Third and to my mind the strongest case for pursuing this route is the inequity of where your money - as taxpayers - actually goes. I've already stated on this blog about the fact that 60% of business rates paid by Surrey businesses is redistributed elsewhere in the United Kingdom. What I didn't know until recently was that out of a £6b annual tax take in Surrey, £2b remains in county, with £1b of that going straight to Surrey schools. The missing £4b is redistributed elsewhere in the country.
To use a simple example, what this effectively means is that Surrey taxpayers are currently driving around on potholed roads, while paying for councils in less affluent parts of the country to fix theirs.

But it gets worse.

If Surrey had the same level of central government grant as some other local counties, then Mr Hodge would be able to, overnight, reduce Surrey Council Tax by 58%!

So that is why I actually supported the increase. I believe it sends a message back to central government that this historic redistribution is unfair to Surrey taxpayers; it requires recalibrating; and that Surrey leaders are prepared to risk political career suicide by getting the best sustainable deal for Surrey residents until such time as the redistribution question is addressed.
In fact, I'll go further than that. I believe Mr Hodge has shown real steel on this one, and should be commended.

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