Lib Dems Launch Axe the Tax Campaign

6.00.00pm GMT Mon 12th Jan 2004

Liberal Democrat Leader Charles Kennedy today set out his Party's alternative to replace the unfair Council Tax.

Lib Dems Promise to Scrap the Unfair Council Tax

A new Local Income Tax, set at an average of 3.75p would be levied to replace Council Tax. Based on people's real ability to pay, the move would mean tax cuts for millions of pensioners and ordinary families. Mr Kennedy, launching the new proposals with Liberal Democrat ODPM Shadow Edward Davey said the new Local Income Tax would leave 70% of households either better off or unaffected.

The Local Income Tax plans include:

1. A tax free personal allowance of at least £5,000 on implementation

2. No rise in the overall tax burden

3. A cap on income subject to local income tax at £100,000

4. Using the Inland Revenue to assess and collect local income tax

5. Estimated savings of over £300 million a year on bureaucracy

Charles Kennedy said:

"Council Tax is the most unpopular, unfair tax in Britain today. The Audit Commission has called the Council Tax system 'fundamentally flawed'. It is deeply regressive - a pensioner can pay as much as a cabinet minister

"Local Income Tax is a fair, efficient, tried and tested method of local taxation. It is already used in many other countries around the world and works very well. Most importantly it is directly related to the ability to pay. Our plans for LIT will be a huge advance for most people - 70 % will pay less or be unaffected."

Edward Davey added:

"Britain's poorest 10% pay four times more of their income in council tax than the richest 10%. For pensioners, the poorest 20% pay nearly six times more of their income than the richest 20% non-pensioners.

"In a country where the average household income is around £21,700, a local income tax based on the ability to pay, is the only fair means of raising revenue.

"By using the existing income tax system, we can save at least £300 million on bureaucracy alone. And local income tax doesn't need a costly benefit system - it has fairness built in."

Cllr Chris Clarke, Lib Dem Leader on the LGA who was also present at the launch said:

"The Audit Commission was right to say the council tax system has "fundamental flaws". On the Government's Balance of Funding Review, I am trying to help solve those flaws, but it is increasingly clear the only viable option is a local income tax.

"If the Government is serious about "new localism" it has to sort out the mess of local government finance, and end councils' reliance on such an unfair tax. A local income tax works in countries as diverse as the USA and Sweden, we believe it can work here."

Annette Brooke MP for Mid Dorset and North Poole said:

"It is absolutely vital for pensioners and for those on lower incomes to be spared

such a vicious and inequitable tax. Based on income and ability to pay, the

Liberal Democrat policy is the only alternative being discussed in the current

arena."