Poll tax

The poll tax, officially called “community charge“, was an infamous individual-related tax introduced by Margaret Thatcher in 1990 to fund local state services. It was the result of reforming the rates for houseownership and support local government businesses. Every adult, no matter how rich or poor, had to pay the same rate. It was far too much to pay for millions of people in Britain and caused much outrage and many riots because of its unfairness. The poll tax is supposed to be the crucial reason for the fall of Margaret Thatcher in 1990.

Background

The poll tax was an individual-related tax to fund local state services. This tax turned out to be very unfair as every person aged 18 and older had to pay the same amount regardless of people's property, income and wealth. The poll tax did not differentiate between poor and rich. As a consequence, the rich were getting richer and the poor even poorer. As many people were not able to pay such an high amount, many people refused to pay.

Previously to the poll tax, there was a rate system for house owners. Every home owner payed a property tax to fund the local government services. To Thatcher's opinion this was unfair and not conservative. Regarding the emphasis of the individual in Thatcher's politics everybody had to pay. Looking for an alternative so that in 1990 the poll tax was introduced. „A tax that local authorities could issue and be responsible and to spend them in their own way“. It was supposed to reduce the burden on the home owners, it was a fixed fee payed by everybody whether home owner or not.Yet about 2/3 of the population did not have to pay the rates or the welfare state beared all costs for them. Thatcherites criticised that Labour governed councils inflicted high rates on well-off people in bigger cities in order to finance local government services. But that did not fit to the ideological ideas of Thatcher's policies. For the Conservatives the community charge sounded fair because everybody had to pay it, and not just home owners. After being reelected in 1987, Thatcher decided to reform the system. Thatcher was looking for new way of taxation that would guarantee enough income for local governments and simultaneously make local governments responsible for the local population. The unfair issue is that now with the poll tax everybody had to pay, even those who do not have any housing property. Scotland was the first country introducing the poll tax in 1989, followed by England and Wales in 1990. The so-called „Local Government Finance Bill“ was passed in 1988 and laid the foundation, although it was rarely supported even by any Conservative but Margaret Thatcher. Opposition was directed not only to the unfairness but also to the problems that caused difficulties in administration and collection.

The tax was supposed to be about 200£, lower than the rates before. Despite being harshly criticised to be unfair, there were reductions to 20% given to students and people with low incomes. Yet the local governments could increase the charges if needed to cover the costs, yet the central government had the power to restrict the tax. However, it was assumed that all people would become a pressure group to restrict/limit the local governments expenses in order keep the poll tax as low as possible. In fact, people had to pay 400£ per household on average and even though there reductions people were not able to pay the tax. The poll tax excluded the homeless, mental patients, prisoners and some other minorities. Regarding inflation and increasing unemployment the tax was raised and governments support decreased. Interestingly, the poll tax was kind of supported by house owners who thought to pay less, but in fact 73% of households and 82% of individuals payed much more than they had payed in rates. Only those house owners who owned expensive houses save money with paying the poll tax, so that the rich got richer and the poorer poorer. Thatcher, however, claimed that people should be proud to fund and support their local government and community.

Riots

In early 1990 many people went on the streets in order to uncover the nuisance and fight against the unfair poll tax. It caused the biggest protest since ages that resulted in violent riots. In April 1990 there was one of the biggest violent riots concerning the poll tax around Trafalgar Square in London's West End. More than 340 people were arrested, 113 injured. However, However, there was also a peaceful march of about 70, 000 protestors in central London.

The criticism included the issues of unfairness, costs for collecting, ease of evasion as it was possible to flee the system by not registering or constantly moving, lack of accountability, centralising tendencies and complexity de facto.

Reactions

As reaction to the riots, the Conservative government subsidised the poll tax significantly, which was totally against the fundamental ideas of Thatcherism. Introducing the poll tax became one of the most crucial reasons for Thatcher's fall in 1990.

John Major, Margaret Thatcher's successor as Prime Minister, replaced the poll tax with a council tax regarding the value of a house.

Sources

Reitan, Earl. The Thatcher Revolution: Margaret Thatcher, John Major, Tony Blair, and the Transformatio of Modern Britain, 1979-2001. Boston: Rowman & Litllefield, 2003.

Jones, Bill and Kavanagh, Dennis. British Politics Today. 7th ed. Manchester: Manchester University Press, 2003.

“An Overview of the Poll Tax“. Youtube. 13 May 2011 <http://www.youtube.com/watch?v=ITDh5JpK7jY> Web.

BBC. “1990: Violence flares in poll tax demonstration“. 13 May 2011 <http://news.bbc.co.uk/onthisday/hi/dates/stories/march/31/newsid_2530000/2530763.stm>