§ 3.10 p.m.
§ Lord DAVIES of LEEKMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have seriously explored the conclusion of the Layfield Committee Report (Cmnd. 6453) that the only serious suggestion for a new source of local revenue that could give a substantial yield and at the same time maintain or enhance accountability, is that of a local income tax on personal incomes.
§ Baroness STEDMANMy Lords, as indicated in our Green Paper Local Government Finance (Cmnd. 6813), the Government gave very careful and detailed consideration to the Committee's report and its various proposals and suggestions, including the possibility of establishing a local income tax. We concluded however that the case for the introduction of a local income tax had not been made out for the reasons set out in Chapter 6 of the Green Paper.
§ Lord DAVIES of LEEKMy Lords, while thanking the noble Baroness for that 478 kindly, contralto and ambiguous Answer, may I ask her when the Government made this decision and also whether they made it after both Houses of Parliament had had a chance to discuss this report?— which was on the first thorough investigation of local government finance since 1914. Also, is my noble friend aware that Sweden, Canada, the United States of America and other countries find no difficulty in collecting local income tax? Finally, is my noble friend aware that an income tax rate of 4.5p in the pound would raise a domestic rate of £1,700 million and might bring in some of the yobboes who spoil some of the local property throughout Britain, even in Wales and Scotland? May this House and another place have a chance of discussing this question?
§ Baroness STEDMANMy Lords, to take the last point first, this House can, if it wants to have a longer discussion on the Layfield Report and its proposals, arrange that through the usual channels. I would have thought, however, in view of the time at our disposal, that it might be rather unlikely for such a debate to be held before the end of this Parliamentary Session.
A Statement was made in both Houses when the Layfield Report was received, and from time to time there have been various Statements and Questions about the matter. Also discussions have arisen from passing on various debates and Questions that we have had in this House concerning local government and taxation matters. Referring to a local income tax, there are problems about its collection and how it should work—whether it should be on the pay-as-you-earn system or assessed at the end of a year; who would assess it and how it would be collected; how much it would cost to collect and how many more civil servants or local government officers we would need to administer it. Referring to the noble Lord's statement that it works adequately in Canada, the USA and Sweden, the Layfield Committee did, of course, carry out investigations as to how it worked there. The Government themselves have had no consultations with those countries as to how the tax works, but have relied upon the evidence submitted to them by the Layfield Committee. Both Parties seem to have had reservations about whether we should 479 have a local income tax and whether that is the way to deal with the subject which has been raised.
§ Lord LEATHERLANDMy Lords, is my noble friend aware that one of the great difficulties associated with this proposal, which is one I have had to study in great detail for many years, is the question of which borough shall benefit from the tax collected? Might I ask her whether, if she took the chairmen of Tesco and Marks and Spencer, for instance, the revenue from their businesses would go to the borough where they have a two-roomed flat, perhaps, or whether it would go to the dozens of towns where they have branches?
§ Baroness STEDMANMy Lords, that is precisely the problem that faces anyone who tries to administer a local income tax. Do you collect it at the source where the person works and then pay it into the borough where he or she earns the money? Do you have some system whereby some of it or all of it is transferred to the borough in which the taxpayer lives? All those kinds of complication arise when one tries to administer a local tax.
§ Lord DAVIES of LEEKMy Lords, is my noble friend aware that that answer is not good enough? The Layfield Committee went into all these questions—many of us over the years have had experience of being on committees and nothing happens with the magnificent work that has been done. They are not insurmountable and at least Parliament should have a chance of a discussion in depth on the financing of local government, because it is getting out of hand.
§ Baroness STEDMANMy Lords, that is a matter for the noble Lord to pursue through the usual channels.