Axe the Tax: is the party softening its line on Local Income Tax?

by Stephen Tall on August 7, 2008

The Guardian publishes today what appears to be a well-briefed article suggesting the Lib Dems are thinking of deferring plans to scrap Council Tax in favour of a local income tax:

Liberal Democrats are planning to soften their support for a local income tax to replace the council tax, a key policy for at least three elections. Instead they are expected to propose reforms to adapt the council tax.

Vince Cable, the Liberal Democrat treasury spokesman, is backing the shift in stance. He believes the party should not look to introduce, or press any coalition partners to introduce, a local income tax for at least one parliament. The shift would make the proposal a medium-term goal and serve to lift media focus on the uncertain implications for individual taxpayers during an election campaign.

The local income tax plan, defended on the basis that it is fairer than council tax, has often left the party exposed at election times.

This would certainly be a significant move – Axe the Tax has been a signature campaign for Lib Dems up and down the country for years, insulating local council groups against the unpopularity of council tax rises, and striking a chord with many voters with its easy appeal that such taxes should be based on ability to pay.

It does, of course, have its internal critics. Sue Doughty, former Lib Dem MP (and current PPC) for Guildford, went on the record to blame the policy for her defeat in the 2005 general election. And of course the Land Value Taxers in the party have never been reconciled to the concept of a Local Income Tax.

If the Guardian report is true, it marks a third shift in Lib Dem thinking in recent months, alongside the commitment to cut the overall tax burden for the low-paid and middle classes, and the likely reforms of the party’s commitment to oppose tuition fees. Of course, a political party’s thinking can’t stand still, and it’s certainly arguable that the Lib Dems’ policy development stagnated during the ‘easy years’ post-Iraq and when the Tories were in the doldrums.

But will party members view these shifts as long overdue; or camel back-breaking straws?

UPDATE (11.20am): Vince has issued the following statement:

The Liberal Democrats remain committed to scrapping the unfair Council Tax and we remain committed to introducing a Local Income Tax, based on the ability to pay and this will be a manifesto commitment. I will be working with my colleagues on how these policies can be implemented most effectively.”