Rates or Taxes?1
| DOI | http://doi.org/10.1002/j.1099-162X.1960.tb00168.x |
| Published date | 01 April 1960 |
| Date | 01 April 1960 |
| Author | Michael H. Whincup |
Rates or Taxes?'
by
MICHAEL
H.
WHINCUP
WHAT'S
wrong
with
the
rates?
NALGO
members
have
as good a reason as
anyone
else to ask
the
question -they
are
ratepayers.
And
they
have
a
better
reason
than
most to
study
the
answer - since for so
many
of
them
the
rates
are
a
major
source
of
their
pay.
The
purpose
of
a
rating
system is clear
enough:
to provide
money
for local
services. Since
their
origin in
the
seventeenth century, rates
have
been
essentially
alocal tax.
In
the
early days
the
tax
was levied
upon
visible signs
of
wealth
such
as horses
and
cattle.
Now
it is simply a
tax
upon
land.
Although
the
local
authority
uses the money, it is
the
Commissioners of
Inland
Revenue
who
value
land
for taxing.
Their
method,
basically, is to ask
what
rent
a
tenant
would
pay
to occupy
your
land.
This
sum minus
what
you
as
landlord
would
pay
for repairs
and
insurance is
the
net
annual
value.
These
assessments
which
are
often
the
subject
of
appeals by aggrieved
householders
are
then
given to
the
local
authority
which thus knows the
rateable
value
of
the
property
in its
area;
the
value in Birmingham, for example,
is
about
£15
million.
Each
year
the
local council decides on a
budget
in
which
it balances
the
cost
of
its projects against
the
money
it hopes to raise; some
of
this comes rrom
rates.
To
calculate
what
each
person pays in rates
the
council sets
the
sum
required
against
the
net
annual
value for
rateable
purposes
of
all its
land.
Each
item
of
property
has to
produce
so
many
shillings
and
pence
-
the
familiar
formula
ofa
rate
of, say, I5s. in
the
pound.
If
this were
the
rate,
ahouseholder
whose house was assessed
at
£40
net
annual
value would
have
to
pay
£30
for
that
year.
What,
then,
is alleged to be
wrong
with
the
system? Well,
how
much,
for
instance, would a
tenant
pay
for
the
occupation
of
atelevision mast, arailway
line or
an
advertisement
hoarding?
And
how does
the
system allow for increases
in rents
and
costs?
It
is so difficult to
apply
the
basic theory
that
the
position
has steadily
deteriorated
into
near
chaos. Houses
are
still
rated
on 1939 values,
so
the
Commissioners still ask
what
rent
was
paid
then. Shops
are
rated
on 1956
values less one-fifth.
Industry
also stands by its 1956 values
but
less one-half,
and
agricultural
land
is completely
unrated.
Industry
and
agriculture
were
given this relief
at
the
time
of
the
slump
to encourage
national
recovery.
Certain
properties
are
regarded
as
incapable
of
profitable use
and
are
therefore
rate
free.
There
is supposed to a re-assessment every five years.
But
the
next
one, in 1961, promised to be so complex
that
it has
already
been
postponed.
There
are
other
and
perhaps
more
serious problems.
Since this
tax
is essentially
upon
land
it disregards income.
There
is no
graded
rates
demand
as
there
is
graded
income tax. While it
may
once
have
been
true
that
your
house indicated
your
means
this seems doubtful today.
Some
relatively
poor
people struggle to keep
up
highly
rated
houses.
Some
comparatively
wealthy
people live in
corporation
houses
and
pay
quite
low rates. Because
land
is
presumed
capable
of
'profitable use' you
pay
on
the
basis
of
an
imaginary
1Published with acknowledgement to Public
Service
- official
Journal
of the National
and
Local Government Officers' Association (NALGO).
109
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