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"What's to be done? Suggestions in a plain brown envelope to 11 Downing St, London SW1, please." was the missing final sentence to Part 1.
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Part 2 - Residential - The 1980's provide a perfect example of how a major, seemingly obvious & sensible, reform can lead to a political maelstrom.
Back in the early 1980's, Mrs T's advisers also searched for an unarguable number on which to base the residential tax payable, which would involve the minimum expense on collection staff. The obvious number was the property's occupants. You can't argue about who is occupying a unit and so consuming local services. Charge by the head. That picks up everybody.
(I should interject here that I wasn't resident in the UK at this time and am therefore unaware of the minutiae of what went on. All I know was gleaned then from foreign newspapers.)
They called it the Poll Tax and the world went mad - demonstrations, riots, public effervescence. It nearly brought down the government and had to be withdrawn. I have no idea why the public went nuts, but they did. It seems pretty straightforward to me, from half-a-world away.
The result was a new search for an unarguable number and that eventually centred on the amount the house or flat last sold for. Many residential units are directly comparable, so there's not much room for argument. There will be some, but it can kept to a manageable number by placing the units in taxable bands. So making the precise value irrelevant. There are 8 of them and they are based on what the unit sold for, or would have likely sold for, in April 1991. Ranging in value from under £40,000 to over £320,000.
This was a mere 29 years ago. Markets are, of course, continually changing, albeit slowly, as areas move in and out of fashion, so the Act provides for regular revaluations - What did comparable units sell for in 2000, 2005, 2010, 2015 & 2020? - maybe forget doing it in '05 & '15 to keep costs down. Alas, successive governments have run like the wind away from this political nettle. But in the meantime, the changes in local markets are being ignored, which means that more and more properties are moving upwards or downwards, with respect to 1991, towards the adjoining bands. The facilities within the homes change as we add swimming pools, private cinemas & electronically controlled CCTV & heating systems.
This "List" is now almost 30 years old and without doubt out of balance. It is especially out of kilter with regard to the more expensive homes, particularly in the South-East, where multi-million pound homes are common. £10 million houses in Millionaires Row, Hampstead, with ten or 15 bedrooms, pay the same council tax as a mere £1.5 million pound home just 400 metres away. Is this fair & reasonable? I make no pretence to know, but there is certainly a case for extending the bands above Band H, which is all units above £320,000 in 1991.
Yet again we are left with a politically unbalanced tax r
Part 1 Commercial - We tax property because it's a significantly valuable asset. Both national & local governments always need money to pay for the services they provide to us. So far, so simple. The difficulties start when you try to pin down which element of the value of a property that you wish to tax. That's because a valuer has to be paid to assess a notional value, before the government decides the percentage that it wants to collect. This assessment is theoretical & we can all argue with a theory.
Thus the taxpayer must have the right to challenge the capital value, or rental value, assessment levied against his property, & so the difficulties start. An army of assessors is required nationwide, the District Valuer, & the surveying profession provides the taxpayer with another small army of specialists to defend the taxpayers against any "unfair" assessment. In this era of restraint on both local & national government expenditure, the DV is an anathema, because he breeds Valuation Courts, paperwork beyond imagination & interminable delays to updating records, all of which requires an ever-growing headcount. Plus, every five or ten years the DV has to go out & update all the values. This costs a fortune & always caused consternation amongst the general public and uproar amongst the tabloids, as an old widow pensioner, living in a mansion in suddenly fashionable, say, Hackney, is now asked to pay £20,000 a year in residential rates. Bad news for the political classes.
The solution to this knotty problem is to get away from arguable numbers. We want certainties. Something unappealable. A quick & dirty number that produces cash without much expense on the part of the collector. PAYE is brilliant because your payslip says how much you were paid and the tax rules say how much must be deducted. No argument there.
Starting in the 1980's, Mrs T led the search for root & branch reform. Most commercial property is rented by the occupier, so the easy solution was, and is, to gear business rates to the rent being paid by the tenant. In an era of rising rents, the balance was in favour of the tenant. The local authority got to increase the Rateable Value only after a rent increase kicked in & that remained static for five years until the next rent increase. Tenants did not complain.
The difficulty comes today when rents are falling fast, the valuation courts are clogged with appeals & the next major revaluation is years away. All at a time when local govt. is desperate for cash.
None of this is totally logical because all systems are imperfect. The valuation system is very slow. It's not geared to providing fast relief in an emergency. Whatever Mr. Sunak puts forward in March can only be in some form of abatement, or postponement under the current regime & further, this will oblige him to shovel into other central government revenues to pay the local authorities for the cash they've lost, or they'll go broke.
What