By shelving Sir Michael Lyons' recommendations on council tax reform, Gordon Brown has turned his back on a historic opportunity.
The man who would be prime minister threw away an opportunity for a real change that would have hit the rich and helped the poor. Sir Michael Lyons, professor of public policy at Birmingham University, in a well-argued report, said the time had come for a radical overhaul of council tax. He proposed a really big increase for the multi-millionaire class in the amount - some 100-200% more - they contribute to the local community and some much needed help for the poorest first-time buyers, scraping to buy the last remaining homes worth less than £102,000 in England.
Phil Woolas, the local government minister, with Treasury backing, within hours of its publication threw out the plan for at least the next five years. This was great news for Russian oil tycoon and Chelsea football club owner, Roman Abramovich, and Labour donor and Indian steel magnate, Lakshmi Mittal, to name but two people with property worth in excess of £2.5m. They have saved paying anything up to an extra £3,000 a year - a cool £15,000 for the next five years. For magnates like them, this is loose change compared to the billions they spend every year, but no doubt they would be delighted that a Labour chancellor is so keen to make sure they avoid any unnecessary tax.
Rather surprising, though, is the reverse side of the coin of Gordon Brown's decision. By not doing anything, he has also mugged the wallets of the inner-city poor. For a chancellor who makes such a issue of taking millions of poor people and their families out of the poverty trap, he has actually thrown out, on Michael Lyons' figures, the chance of rebating £150 a year in council tax to those living in the cheapest property. Unlike the other group, I have a feeling they could find quite of lot of uses for the extra £750 they would have had for the next five years.
No doubt, Gordon will say that the poorest would be able to claim council tax benefit, anyway. But that case is crushed by Sir Michael as well, when he points out that there is £1.8bn unclaimed council tax benefit because of complications and stigma in filling in forms. He has a good answer for that: give them an automated rebate instead. But guess what? The government, faced with paying out with almost as much as they can raise on a 1p income tax, isn't keen on doing that immediately either.
If Gordon has wimped out on doing anything redistributive on council tax, the Tories have even been worse. Caroline Spelman, their spokeswoman, issued hysterical statements warning the middle class, Daily Mail readers, of tax bombshells if they repaved their patios. She appears to want to preserve the ludicrous 1991 valuations, which are presently used to work out council taxes (even for homes built in 2007), in aspic. No doubt, if council taxes had not been invented, she would still be defending medieval tithes, as the best way of raising taxes.
The Liberal Democrats' plan to replace the council tax with a local income tax is also exposed in the report as not being properly thought-out. This left Labour with a chance to be bold, to go out and argue that those who have made the most out of England's obession with ever-rising property prices should pay a little more tax. The change would have left those in the middle neither better-, nor worse-off. But I was forgetting that the old "s" word, socialism, is only used by Gordon as a bit of rhetoric at trade-union rallies.
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