Councils should consider local income tax to fill funding void, says think tank

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CASH-STRAPPED councils should consider clobbering Brits with a local income tax to plug their multi-billion pound funding black hole, a respected think-tank today says.

The Institute for Fiscal Studies said English town halls have had their funding slashed by a fifth in the past decade.

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The Institute for Fiscal Studies says local councils will face a funding gap of £2billion a year for social adult care by 2025[/caption]

Council bosses have lopped 50 per cent of their housing and culture budgets as they scramble to slash costs.

But they face a fresh crisis and a funding gap of £2billion a year for adult social care alone by 2025, the IFS said.

The think-tank said ministers must consider handing councils new powers to levy their own, local income tax to stave off the crisis.

IFS researcher David Phillips told The Sun: “Ministers can give councils a slice of the income tax they raise, then the central government would have to find new ways of raising revenue to make up the difference, like increasing National Insurance Contributions.

“Or they can give councils the power to levy their own income tax.”

He said different councils could set the tax at different rates, and offer different services.

Some town halls could decide to set it low and offer no-thrills basic services to their residents like the airline easyjet.

He said: “You could get so-called easy councils, which could set the tax rate low and offer only basic services.


“And you could get some councils that decide to set higher taxes so they can deliver more services.”

But this could create a postcode lottery for services, he warned.

The IFS said ministers face a big choice. Either they must give the green light to hiking taxes so councils get the cash they need. Or Brits must accept their councils will massively scale back what they do.

 


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