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FINANCE SUPPLEMENT - TIM STRETTON

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Is Michael Howard as mad as a hatter for his ideas on local tax?...
Is Michael Howard as mad as a hatter for his ideas on local tax?

The Conservatives may have performed better than expected in last month's election, but departing leader Michael Howard's proposals on council tax came straight out of the basket marked 'desperate measures'. A rebate for hard-pressed pensioners was perhaps no worse than simplistic, but the proposed scrapping of the 2005 council tax revaluation - locking 1991 property values into the system - was the feeblest contribution to the debate so far. With at least another four years in opposition, his successor at least has time to come up with some more considered ideas. A glance back over the centuries may provide inspiration.

A famous precursor of the council tax was the window tax of the 17th and 18th centuries. Householders paid tax based on the number of windows in their property - even today, this is perhaps as accurate a measure of affluence as using 15-year old property prices. Those keen to flaunt their wealth used to build windows over brick walls. But the prevalence of conservatories in the sunny south-east would surely alienate many core Tory voters were this tax to be reintroduced today.

Between 1784 and 1811 revenues were also raised by a hat tax. This might fall foul of sexual discrimination legislation today, since it applied only to men's hats. With the baseball cap seemingly the only popular form of head wear these days, a modern-day version might more snappily be called the 'chav tax'.

The French, who invented VAT, also brought in the imaginative salt tax, which lasted for several hundred years until the French Revolution. This hated tax was unavoidable, since it was compulsory to purchase a weekly salt quota. Like the council tax, salt tax had a complex system of exemptions and discounts: some regions bought exemption for a lump sum, while salt from the Mediterranean carried a lower duty than salt from the Atlantic. With a good spin doctor, the salt tax could be badged as a healthy eating measure.

But perhaps the Tories don't have to go so far back in history. As recently as 1989, there was a tax levied on property and proportional to its value, avoiding the crudity and cliff-edges of the council tax banding structure. It was relatively progressive (no upper band), had a simple and memorable name - 'domestic rates' - and it commanded widespread support.

Michael Howard, who abolished the rates to bring in the poll tax -perhaps not the best historical tax to resurrect - can hardly advocate their return, but his successor will have no such constraints. 'Axe the tax! Rates are great!' You heard it here first.

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