Council tax protests - experts look for solution

November 28, 2003

As protests over council tax rises continue in Britain, experts at Cardiff University have been called in to help identify new ways of funding local government.

The team is studying how local revenue is raised in other countries, and its findings are feeding directly into a Government Review of the way in which local services can be funded in the future, commissioned by the Deputy Prime Minister's Office and chaired by Nick Raynsford MP, the Local Government Minister.

The research is a collaborative venture, led by Professor John Loughlin, of the School of European Studies, and Professor Steve Martin, Director of the Centre for Local and Regional Government Research.

"Local government funding has become a really important issue," said Professor Martin. "The council tax seems increasingly unpopular and is widely seen as unfair on pensioners and others on fixed incomes. If a better way can be found to fund local government, it is hoped that this may also restore confidence in local councils and lead to increased participation in local elections."

Currently, some 75% of local government income comes from central government, and only 25% is raised locally from council tax. Some other countries use a much wider range of methods and the Cardiff research team is looking at options such as: a local income tax; local sales taxes; charges for local services; a tourism 'bed tax'; and business rates (which are currently set nationally).

Professor Loughlin said: "We have looked at countries such as Sweden, Spain and Italy and have found there are lessons the UK could learn."

He added: "It does seem that change is likely because there are clearly problems with the current system. Demand for public services is increasing, and because local authorities only have control over a quarter of their funding, increases in council tax appear disproportionately high."

Professors Loughlin and Martin have now presented their initial findings to the Ministerial Review and have been commissioned to conduct a further, more in-depth study by the Office of the Deputy Prime Minister.

"We will be looking more closely at local income tax in Sweden and at local taxation in Spain," said Professor Loughlin. The Cardiff team is expected to report back in the spring.

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