People are sometimes surprised to learn only about 25% of UK council income comes from council tax and that the majority of funding comes from government grants of one form or another. It is also true to say that, more or less, local government can only spend its money on something that central government has given permission for - usually through law. There has been some talk in the UK of late on the idea of financial autonomy for local government and a power of general competence that will allow councils to spend more on their own priorities - full local taxation is one way that the idea of financial autonomy for local government might be taken to it's natural conclusion.
There are a number of advantages to this idea:
- Control over tax gives local government status and legitimacy. In the Localopolis pamphlet (pdf) I suggest that local taxation is closely linked to the sovereignty of local government.
- The system would be very simple for people to understand and therefore easier to make open and accountable to the public
- Full local tax powers would generate greater interest in local elections and promote greater public involvement in local politics - the local economy would come into much sharper focus in local political debate
The costs of local tax systems would clearly be an issue but one to be resolved locally.
Finally, why limit local tax collection to council services? Local tax is already collected for police and fire authorities and for community and town councils. Why not for health and other services?