Originally posted by archie@Jul 4 2005, 07:52 PM
Brian - wasn't the northern council tax subsidising the south (relatively speaking) about 10 years ago?
No. Though Mr. David Clelland, MP for Tyne Bridge, among others, used to claim that this was so. Now I believe that the tax system should operate in such a way as to redistribute wealth from the better off to the poorer in society, and that is the theory behind income tax, national insurance, value added tax, capital gains tax, inheritance tax and many more.
The council tax replaced the late and unlamented poll tax which in turn replaced the rates. The idea behind all of these local taxes was that they should be set to fund the services required and supplied in the area in which they were collected. Government made grants to each area to prevent politically damaging hikes in the amounts collected but also to exercise control over spending. A sort of "If you don't do it right, you'll get nothing from us" system.
In 2003 the government changed the system by what local government minster Nick Raynsford called "substantial redistribution toward areas of deprivation throughout the country". At the time some accused the government of undermining the economy of the south-east by consciously shifting substantial funds from south to north.
The minister said that councils in poor areas, such as Merseyside, would be compensated for raising substantially less in council tax than more affluent shires. At the time the largest gaining regions were the East and West Midlands, followed by the North-west, Yorkshire, the North-east, the South-west and, finally, the South-east.