Direct Democracy: A Local Sales Tax?
Direct Democracy propose replacing VAT with a Local Sales Tax. Essentially, County Councils would set their own rates of sales tax and the money would be entirely their own resource to do with as they wish. D.D. point out that VAT recipts and local government grants are very similar in size, so a straight switch is possible.
BUT, given that D.D. are proposing many other devolutions of power to the local level, including crime budgets, some social security and welfare programmes, surely the local councils are going to need a lot more money than they are getting now? A local sales tax probably wouldn’t cut it.
I don’t think this is an insuperable problem. Certainly in the beginning there is no reason why local government has to administer taxes as well as set rates. It would be simple to instruct the Revenue to apply a different rate depending on the postcode of the individual/business in question, and for that money to be directed to local government as their ‘own resources’ of a sort. This means that the objection over how difficult it would be for local government to collect an income tax is irrelevant, and with an income tax the devolved programmes can be paid for.
The LibDems crashed and burned with a local income tax proposal, mainly because it was seen as just an extra tax. However, if powers are devolved, there is no reason income tax can’t also be, as long as national rates are reduced accordingly.