The alternatives
In order to re-connect the electorate with local government and to provide a more equitable system of local government financing there are a number of alternatives and permutations that might be employed using VAT.
All VAT revenue to go to local authorities?
The existing revenue from VAT, by coincidence, if almost exactly the same as the total spent by local authorities.
So the entire VAT revenue could be apportioned to local authorities according to a formula based on population with some tweaks here and there perhaps.
Council tax would be abolished, business rates would be abolished. Collection of VAT would still be the job of Customs & Revenue with a re-organisation of the way of working. Cutting out a great deal of work for local authorities - collecting council tax and rates is an expensive operation. Unify it into an existing finance-collecting system and considerable money could be saved - I suggest.
Just collect through additional VAT?
Probably the simplest: instead of collecting rates and Council Tax, let the Customs & Revenue collect, on behalf of the local authorities, an additional percentage on VAT as required by the various local authorities. This will link the tax with income through tyhe ability to spend. Food, children’s clothes, books etc will still remain zero rated or exempt so they wouldn’t increase in price.
What about the Government’s revenue from VAT?
The government forks out huge grants to local authorities at the moment. This would no longer be necessary. The overall tax burden would remain the same. The overall expenditure would remain unchanged.
Local authorities setting their own VAT levels
Each local authority could set out its requirements as a total amount of money, convert this to a percentage and then the percentages required by parish, town, district and count councils would be the total percentage VAT charged in each area. There would be a competitive incentive to keep the figures low and electors would see the direct connection between their elected representatives and the amount of tax collected.
Major projects affecting more than one authority
Let’s imagine a major project that would affect or benefit more than one authority. Here there would be encouragement for local authorities to collaborate on projects of a joint nature and agree a portion of their VAT requirement to be allocated to that ‘cross-border’ project.
Some projects would be central government funded or subsidised
There would undoubtedly be some projects of a major nature that are in the interests of the whole country or a significant part of the country. This is where there would be scope for central government intervention in the form of money to pay for such projects.
One national rate or locally set rates of VAT?
Current EU taxation policy is trying to unify VAT across the EU. However, I don;t believe this should be seen as a barrier to locally set rates. If the idea is right, then it is right and any campaign should set its sights on that policy as well in order to permit locally-set rates of VAT if it is felt to be the correct approach.
Permutations and other ways of working
There could be permutations and combinations, alternatives to the above outlined ideas. I am not pretending that these ideas are the be all and end all. Far from it: that’s why I have set this website up - there are many people out there with ideas, knowledge and experience that they can contribute. Together we should be able to come up with something that is better than the current cumbersome system. It simply takes a bit of lateral thinking, thinking ‘outside the box’.
