An income tax is the fairer solution
The debate on rates has got a lot of interesting attention lately, even
though it’s an issue that’s been developing for at least four years now.
Alliance Party is focused on providing a solution to the current rates
crisis, while other parties seem more intent on blaming one another.
The people of Northern Ireland deserve a viable, fair and affordable
solution to paying for local solutions. Any tax based on property
values will punish the elderly, those on low and fixed incomes, and
those who live alone.
When the previous Northern Ireland Executive initiated a reform of
the domestic rating system, Alliance MLAs pointed out that such a form
of property tax is inherently unfair, as there will be those that are
asset-rich but income-poor. Rates do not account for ability to pay,
and adding exemptions adds to administrative costs.
Tinkering with how we value properties won’t get away from that. The
only way to ensure any scheme is fair and affordable is to link it to
people’s income today, not their wealth when they bought their house
Alliance has called for the rates system to be scrapped, and replaced with a local income tax.
Income tax is generally recognised to be the most fair and equitable
form of taxation. It best reflects an individual’s ability to pay.
Alliance is disappointed that so far no real consideration has been given to the introduction of a local income tax.
It is not accurate to say that there is little public support for
such a change. In fact, Alliance is aware of considerable preference
for such changes from a wide range of sources. There is an appreciation
of the greater fairness and transparency of a system based on income.
Given that HM Revenue & Customs is aware of the home address of
all tax payers, it should be relatively easy for either the Northern
Ireland Assembly or District Councils to inform it of the top-up levels
that they require (as replacements for the regional rate and the
district rate respectively), and for HM Revenue & Customs to
allocate and collect the required funds. The PAYE system could be used
if deemed appropriate.
In the most recent rounds of public consultation, Alliance has
stressed our preferred option of a local income tax. We have promoted
our local income tax proposal in our election manifestos since at least
Alliance’s position has been consistent. There’s no bandwagon jumping for us.
Some parties are calling for a rates cap. This is understandable,
especially considering that the rates system in England and Wales has
one. However, this is still a form of compensation to the rich at the
expense of the poor, because the overall rates burden doesn’t change —
it is simply redistributed.
At the moment, the only proposed rates relief is ostensibly for
students, but in practice the landlords who own the properties that the
students rent. This is especially appalling, as landlords profited
handsomely from the lack of planning control preventing the conversion
of family-occupied residences to Houses in Multiple Occupancy (HMOs).
This lack of control led to speculation, which itself drove property
values higher than normal.
There is no rationale to further reward those who have made so much money from poor Government policy.
Indeed, long-term residents bought their house at what they could
afford. These are their homes that they have invested in, not
short-term speculations. As one local resident says, “You can’t
exchange a brick for a loaf of bread.”
It is unacceptable to have a rating system that forces anyone to have to move from their home.
Current Government proposals are actually a disincentive to invest
in property. As the rates burden is greater for the more valuable the
asset, there is no incentive to purchase or make improvements to a
All of the other political parties in the Northern Ireland Executive
had the opportunity to frame the debate on rates. None of them gave
consideration to using an income tax.
The direct rule Ministers are now tinkering with an unjust system
that was agreed by the previous Executive. Other political parties will
claim victory with a rates relief here or there. Alliance will remain
steadfast in replacing this iniquitous proposal with a fair and
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