Local taxation with local representation

Sir Michael Bichard is a man to listen to – his proposals are practical and usually sufficiently well supported that they make it into policy. I was listening to him on Radio 4’s Today Programme this morning (Friday 18 Sept 2009) discussing Local Government with Tony Travers of LSE. The gist of the conversation seemed to be that local government has delivered significant innovation, whereas Whitehall had offered no improvement. But local government couldn’t go any further because they are micro-managed – their income is set by Whitehall, and services are also set by Whitehall. Sir Michael Bichard and Tony Travers stopped just short of saying that local government should have tax-raising powers – reduce the tax take of central government and give local government the freedom to raise tax and services, or reduce tax and services.
Would it work?
Yes probably, but it would be quite complicated. Residents would make up part of the local tax take, employers another part, and sales tax the last part. Residents would be relatively easy to define – if you live there you are a resident. But does a business have to split out the employees in each branch office, and pay tax accordingly? And what’s to stop them registering all employees at a tiny hut on Skye, when they actually work in London? What about retailers and the sales tax portion of the whole? How much paperwork would be needed for filing 150 tax returns in 150 locations?
How about the impact on democracy?
There’s a tendency amongst politicians and public servants to believe that business can go on and on paying, and in spite of some high profile moves out of UK, businesses are still seen as an easy target. If taxes were paid locally it would be easier for businesses to demand representation locally. Democracy happens where the people are. As Time magazine reported a few weeks back, “we send our representatives to Congress to do our work. When they get there they work for big business” – national and international government can’t see past their own navels and don’t represent us. More and more power should be local.
I’m all for local taxation
I’m certainly for local accountable government, with the ability to respond to the needs of the voters by raising more (or less) income to provide more (or less) service.