When was community charge introduced

Or should people on higher incomes pay more? That idea was floated by the prime minister herself in an unusual signed "personal minute" to Major on 9 April. And she had another idea: putting an extra penny on a gallon of petrol and distributing the proceeds to councils. She wrote in the suggestion by hand three times on a memo of 10 April listing options. But none of her colleagues seems to have paid any attention and the idea went nowhere.

Meanwhile there was a growing split. Patten and the local government minister Michael Portillo wanted to increase central government grants to local authorities. Mrs Thatcher wasn't having it. Then she and Major, without apparently consulting Patten, came up with an idea for allowing local councils to levy a higher poll tax than stipulated by central government, provided they first put it to a local referendum a "poll tax poll".

Patten was opposed, believing the necessary legislation would be "massive in its political significance" and difficult to get through Parliament.

One of Mrs Thatcher's private secretaries, Barry Potter, suggested that Patten was feeling "bruised" at being ignored. By the end of June Potter told the prime minister that Patten and Portillo, still arguing for more government funds, were now "isolated".

Today Michael Portillo says he and Chris Patten really wanted to find a way effectively to abolish the poll tax: "We wanted to take the guts out of it, take the bits that were hurting out of it… but we recognised for her sensitivity that it would still have to be called the poll tax.

They also believed the problem would take central government money to resolve. As to the lessons to be learnt from the debacle, he draws a parallel between the decision to introduce the poll tax "without thinking it through" and David Cameron's decision to hold a referendum on Europe without thinking through the consequences.

But the chances of prime ministers learning that are, I think, slim. But nothing worked. The practical difficulties and the political pressures were too great and Mrs Thatcher's career was foundering. In November Michael Heseltine, an outspoken critic of the poll tax, triggered a leadership contest from which John Major emerged the winner. He appointed Heseltine as environment secretary, increased VAT to generate extra cash for councils and announced the abolition of the community charge, and its replacement by council tax, in March Poll tax a mistake, says Waldegrave.

The National Archives. Image source, NAtional archives. One of the National Archives' specialists says the poll tax files are a "juggernaut". A major poll tax demonstration in London in March ended in violence. Environment secretary Chris Patten r was charged with introducing the poll tax. Michael Portillo says he and Chris Patten wanted to "take the guts out" of the poll tax. Image source, PA. Margaret Thatcher resigned as prime minister in November Related Topics. Out of thirty-five million people in England who were entitled to vote in local elections, only about eighteen million were responsible for paying rate bills.

With the community charge, apart from exempt groups, all 35 million adults in England would be required to pay local taxes, although the rebate system still meant that some people would pay discounted amounts, as was the case with domestic rates from onwards.

Unlike the domestic rates where only 18 million people were sent rate bills, community charge bills were delivered to all liable adults. It meant that everyone who was entitled to vote in local elections would have to pay local taxes.

See for example Paying for Local Government The local government finance act that brought in the community charge also took business rates out of local authority control. Previously each local authority was able to set the business rate poundage for non domestic premises in the area, and they retained the receipts.

In this system was replaced by a uniform business rate determined by central government which applied throughout the country. Local authorities collected the receipts and sent them to central government which redistributed them to councils on a per capita basis.

Together with reforms to the system of central government grants this meant that any increases in local authority revenues would have to be raised from the community charge, for which the authority would be accountable to the local electorate.

The implementation of the poll tax resulted in higher bills than the Thatcher administration had predicted. Households with single occupants were about twenty percent better off in real terms. However two adult homes were worse off than before with average increases of about 25 percent. Household occupied by more than two adults had average increases in local taxation of just over 80 percent. However these figures would be adjusted by transitional relief allowances.

Altogether about three times as many households were paying more under the new system of taxation as were paying less. There were also significant regional effects with around fifty percent of homes in the north and northwest paying more.

In the south east the effect was less marked, but still more people lost money than gained from the change in taxation. The community charge was even more regressive than the rates system it was brought in to replace.

For the richest people — those in the top decile of household income the poll tax accounted on average for only about two percent of earnings. But for the poorest, those in the bottom decile it accounted for nearly sixteen percent, about eight times as much. When the data is adjusted to take benefits into account the lowest decile paid about four percent and those in the third decile paid about six percent of household income, as compared with around two percent paid by households in the top decile.

In general terms, the less well off households lost money and better off households gained money as a result of the change. Those living in the most expensive homes with high rateable values gained a great del from the change in the method of taxation. People that under the previous system were getting rate bills of around ten thousand pounds a year were now paying community charges of hundreds of pounds.

Although the community charge was more regressive than domestic rates both methods of taxation had similar distributions with respect of percentage of earnings paid in tax at different income levels. Without rebates, both systems showed a direct negative correlation between income and the percentage of income paid in local tax. The poorest ten percent of households paid the highest percentage of their incomes in tax, and the richest ten percent paid the lowest, and in between these extremes there was a consistent reduction in the proportion of earnings paid in tax as income increased.

With rebates, the richest ten percent of households continued to pay the lowest proportion of their earnings in tax for both the rates and the community charge. The effect of rebates was to help the poorest households, mainly the lowest thirty percent in terms of income, although on average they still had to pay a higher proportion of their income in tax in both community charge and rates than the richest thirty percent of households.

Apart from the poorest thirty percent, both taxes were consistently regressive even with rebates — with increasing income there was a lower proportion of earnings paid in tax. The community charge was highly unpopular. The announcement of the tax in was followed by sharp reductions in public support for the conservative party.

There was widespread non-payment, anti-poll tax unions and poll tax riots. Opposition to the tax was instrumental in bringing about the resignation of Margaret Thatcher.