This year saw the biggest rates revolt of modern times. The reason is simple. The people feel that rates are unfair. In many areas the increases amounted to 40–50%; or more—at a time of restraint.
Clearly breaking point is close for many ratepayers.
They await next year's demands with growing anxiety.
Rates are unfair because:
They are not related to ability to pay. The retired pensioner pays the same as his neighbour with a working family in a similar home.
They are not related to services received.
Only one in three electors pays rates.
The basis of valuation gives rise to inconsistencies.
Each year in their negotiations with Governments local councils ask for bigger and bigger grants. They fear the consequences of putting more on the ratepayer.
In my view the system will not last very much longer. The taxpayer is already financing an increasing proportion of local services. [end p1]
The question arises whether it is worth administering a complicated household rating system and a detailed rate rebate scheme to raise a smaller and smaller proportion of local expenditure.
A home, like food, is a basic need in our lives. All governments try to avoid taxing food for that reason. That is why it is exempt from VAT.
And yet we single out the home for an extra tax. Those who improve their homes are penalised even more. The time has come to put an end to these anomalies.
The window tax was abolished years ago. It is about time we got round to relieving the tax on the rest of the home.
The new Government must act.
We have decided that a Conservative Government would abolish the domestic rating system.
We should do this gradually over a period of five years to avoid severe dislocation.
Over that time the increased yield from direct and indirect taxes could take care of a considerable part of the transferred expenditure.
For example, last year's level of income tax applied unchanged to this year's estimated incomes would have raised more than £2,000 million in extra tax revenue.
Similarly last year's rates for VAT would have raised an extra £1,000 million this year, and a part of this revenue could be used to finance expenditure otherwise borne by the rates.