Posts Tagged tax

Labour impose inner London’s highest council tax rise on Islington

So now we know.

As soon as they get the chance, Labour jack up our taxes.

Last night’s budget meeting in Islington was always going to be dramatic. With equal numbers of Labour and Lib Dem councillors, plus one independent and one Green, I hoped that a sensible majority would back the Lib Dem proposal to freeze the council tax. After all that’s clearly what local people wanted.

Then Cllr Donna Boffa – who was already poorly when I saw her last weekend – was hospitalised: and Labour seized their chance to hijack the budget.

When Labour ran Islington Council, we had the highest council tax in London. Last night, true to form, they gave us London’s highest council tax rise.

Labour councillors may be feeling jubilant that they’ve got their tax rise through; but it is ordinary Islington residents who will be paying the price.

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Private rents down, council rents up: another Gordon Brown triumph

The reviews of Islington’s property market confirms that rents in the borough are falling – for private tenants that is.

Under the heading ‘Tenants remain in strong position’, the February Primelocation price index report says that London lettings prices fell for the tenth successive month and were 9.3% (£89.47) lower than this time last year, with Islington, City & Docklands, recording the largest fall (2.5%).

That follows on January’s figures that showed rental values down 1% month-on-month and by 4.9% year-on-year, with Islington, City and Docklands registering the largest fall (-2.3% over the month).

This all leads Andrew Smith from Primelocation to conclude chirpily that tenants, not landlords, “are the real winners in this market”.

But that doesn’t seem to apply to social housing tenants. Under Government rules, councils are supposed to increase social housing rents a certain amount each year. Government subsidy for housing will assume the rent rise: if councils don’t put up the rent, then the tenants will lose out anyway, as the housing budget is ring-fenced. So either rent rises or the budget for repairs, cleaning and security gets slashed. Not much of a choice for councils or tenants.

It gets worse: in ‘rich’ areas like Islington, some of the housing revenue is taken by the Treasury, despite the fact that Islington’s actually one of the most deprived boroughs: not just rent but another national tax, as the Moonlight Robbery campaign points out. And the Government policy wants social housing rents to reflect the local market – so social housing in the least affordable areas will become less affordable.

Lib Dem councillors in boroughs like Islington, Camden and Haringey are proposing to freeze the council tax (Islington sets its budget tonight – watch this space); but the rents are beyond their control.

At a time when everyone is feeling the pinch, you might think the Labour government would think twice about raising the housing costs of council tenants. Not least because through housing benefit, central government ends up picking up the bill for many of them.

But no. Gordon Brown and co are pressing ahead with forcing a 6% rent rise – despite pleas from boroughs across London, including Islington, to think again.

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More on Islington’s council tax debate

The Islington Gazette has a letter from Cllr John Gilbert.

Meanwhile there’s a whole page of letters in the Islington Tribune arguing both sides of the case – for a council tax freeze or for a rise in council tax to fund universal free school meals.

I’ve already made my views clear: we’ll find out the Council’s decision when they set the budget next Thursday.

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£31M a day – what would you spend it on?

Gordon Brown’s temporary VAT cut is costing us all £31M a day.

For the same money you could buy 31 MRI scanners a day for the NHS. Or 31 new children’s centres.

At £31M a day, that’s nearly £1.3 an hour. Enough for a new adult education centre every hour of a 24 hour day.

Or, as Nick Clegg argues, you could use the total £12.5bn spent on the VAT cut to create 95,000 jobs nationwide.

The VAT cut is a drop in the ocean when retailers are already slashing prices to get the punters in. The Federation of Small Businesses says it’s had no impact at all. This money could have been spent so much better.

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Guardian blog 28 November

My latest Guardian blog, covering the Damian Green case, VAT changes, and our success on the Angel crossing campaign, is now online.

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Not profligate enough?

My friend and fellow Lib Dem Roly Harris has a splendid letter in today’s Independent.

Referring to the Government’s push to get us all spending, he says “Generally, we have got into the habit of not buying anything we don’t need … I mistakenly thought that we were being responsible citizens. Now we are in danger of being booed in the street for not being profligate enough.

It’s one more reason why I would prefer an income tax cut to the Government’s planned VAT cut. Cutting income tax gives people money to save or give to charity or spend on VAT-exempt essentials, as we choose (it is, after all, our money) instead of being bribed to buy.

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Time for fairer taxes

No-one likes paying tax.

I remember the taxi driver who told me he agreed with the Lib Dems on abolishing council tax. “And we’d replace it with a low local income tax,” I added enthusiastically. The cabbie disagreed. “No, no, love, just abolish it, you shouldn’t replace it at all.”

I’m not against tax. I’m one of those who believes that redistributive taxation – funding public services through taxing income and wealth – is the membership fee for a civilised society. But even so, if I’m honest, I don’t enjoy paying a penny more tax than I have to.

And unfair taxes risk losing the support of the general public for essential taxation, especially when everyone is feeling the pinch. We’ve all heard the cases of lowpaid workers paying a higher rate of tax than the company directors whose offices they clean. So the least politicians can do is make sure that the taxes we do pay are fair.

With that in mind, this week Lib Dem shadow chancellor Vince Cable proposed a motion calling for an immediate and substantial cut in income tax to benefit low and middle-income taxpayers, paid for by closing the multi-billion tax loopholes which benefit the very wealthy individuals who profited disproportionately from the economic boom.

That’s exactly the sort of policy that would benefit local people who are lower income taxpayers facing high living costs in Islington. So why did Islington’s Labour MPs vote against it?

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Stamp duty

I rarely get a night in front of the TV but found myself in for once tonight; free time with Freeview.

I enjoy Location, location, location, even if it is property porn. Phil & Kirstie are a great presenting team; warm, practical, and highly likeable – even though they are guilty of dissing Islington in the past. I suspect that if I was really trying to move house, it would be unbearable; but as I’m not (estate agents please note), it’s a bit of escapism. Snapshots of different bits of the country (Thirsk looks a good place for a weekend away), sneeky peeks at other people’s kitchens and gardens, what’s not to like?

So it was a bit disconcerting to find a sudden debate about stamp duty popping up among the conservatories and loft conversions. Messages left for Caroline Flint, a telephone chat with Vince Cable, and a policy line from the Tories; no surprise perhaps given Kirstie’s other role, but a bit beyond the show’s usual remit.

Stamp duty certainly needs reform. It’s a crude tax and unrelated to ability to pay. Phil & Kirstie’s proposal is to abolish stamp duty on property sales under £250k for first time buyers and then introduce graduated bands of stamp duty upwards. That’s in line with Lib Dem policies for banding stamp duty relative to house prices; and that could incorporate a stamp-duty free starting band. We would also scrap stamp duty on all carbon neutral homes, whatever their price.

Would abolishing stamp duty under £250K help people in Islington? Not on its own. As it happens we had another estate agent freesheet through the door today; the cheapest flat, a 1 bed near Finsbury Park, is £275k. So why not switch stamp duty from the purchaser to the vendor? As I’ve argued before, that would by definition help all first-time buyers; and it could even console vendors for falling house prices.

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10p fallout continues

More fallout from the 10p tax rate disaster.

When Gordon Brown announced the move last year, Emily Thornberry MP was among those who cheered him on: “I am proud to sit on the Government Back Benches when my Government do things like that”. Oh dear… But now it seems that the brightest Labour brains had doubts at the time.

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10p troubles

Funnily enough, Gordon Brown didn’t exactly spell out that he was effectively doubling income tax for 5 million low paid workers last year. Instead he announced “I can now return income tax to just two rates by removing the 10p band on non savings income”. It all sounded like a minor technicality. Mind you, he also claimed it was a budget to expand prosperity and fairness. The FSA should go after him for mis-selling.

Lib Dems saw the problem from the start. But some people were suckers for this dodgy deal from Gordon the bank manager. Like Islington South Labour MP Emily Thornberry. Speaking in the 2007 Budget debate – and challenged by David Howarth MP on the 10p rate – Emily said “I am proud to sit on the Government Back Benches when my Government do things like that. We had a progressive Budget that is doing the right thing for poor working families…” And even more for rich ones.

Local low earners who are hit hard don’t share her enthusiasm. One woman I met this week is typical: she’s on a low income but doesn’t qualify for tax credits, her bills are going up, and she’s frightened about the future. Now those same Labour MPs who supported the budget are frightened too, and with by-elections looming, the Government has backed down. As Andrew Duffield put it, not so much a tax cut as a Crewe cut….

But the reality is no joke. We still don’t know what the cost of borrowing the £2.7bn for this bailout will be. Only £630 million will actually go to the people who lost out when the 10p rate was abolished.

We don’t know how long these tax allowances will last. And that still leaves over 1 million low earners who are still losing out.

Maybe some voters will be bought off. But many will find it hard to forgive Labour for hiking up taxes on the poor in the first place.

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