Liberal Democrats unveil detailed plans to replace Council Tax

Liberal Democrats today set out details of their plans to replace the unfair Council Tax with a new Local Income Tax.

The proposals would see Council tax abolished and replaced by a Local Income Tax based on people's real ability to pay, a move which would mean tax cuts for millions of pensioners and ordinary families and leave 70% of households either better off or not affected.

Local Income Tax plans include:

1/ A tax free personal allowance of at least £5000 on implementation.

2/ No rise in the overall tax burden

3/ A cap on income subject to local income tax at £100,000

4/ Using the Inland Revenue to assess and collect local income tax

5/ Estimated savings of over £300million a year on bureaucracy.

Commenting on the proposals Totnes Liberal Democrat Parliamentary Spokesperson, Mike Treleaven, said:

' Council Tax is the most unpopular and unfair tax in the land. It cannot be right to have a system where a pensioner can pay as much as a cabinet minister. The Audit Commission have condemned Council Tax as 'fundamentally flawed' and a Local Income Tax is the sensible, fair way to replace it.

Local Income Tax is a tried and tested system around the world in countries as diverse as the USA and Sweden. It is fair, directly related to the ability to pay, and far more accountable as our proposals would show each taxpayer how their council compares to others.

An important question in the Totnes constituency is the treatment of second homes. These would treated in the same way as businesses by levying our equivalent of business rates.

For too long we have had a system for local taxes which is unfair, expensive and inefficient to administer and pays no heed to the basic principle of progressive taxation - the more you have the more you pay - the less you have the less you pay. Local Income Tax is the fait tax that solves these problems.'