EXPLAINER
Is there a maximum tax rate?

We propose a maximum local income tax rate of 10%.

 

In the event a local authority’s budget requires a local income tax rate of more than 10%, the authority may be able to acquire extra funding from central government, however the funds must be used for ‘essential’ services.

 

‘Essential’ services include basic council services not covered by the Public Service Grant, such as bin collections, planning, registrar services, pest control, etc.

 

If the services are essential, central government will fund anything above the 10% rate.

 

If the extra funds needed are not deemed essential, we propose a local referendum is held in which the electorate decides whether to approve the budget or not. This is similar to the current council tax referendum which occurs if a council wishes to increase council tax by more than 5% in a single financial year.

 

If the budget is approved then the local electorate will pay a local income tax rate higher than the maximum 10%. In the case of the budget being rejected, the authority must revise it’s budget and reduce spending to allow the local income tax rate to be set at 10% or lower.