Poll Tax

Poll Tax history

The idea of a community charge originated with the Adam Smith Institute. Thatcher adopted it as a more lucrative alternative to domestic rates.

The old domestic rates system

The Poll Tax was intended to abolish the old domestic rates system, which provided funds for local council services by taxing property rather than people, i.e., only the householder had to pay the rates.

The old tax system relied on the property’s rental value, that is, how much the landlord could charge to rent it to potential tenants. Rebates were introduced for those who could not afford to pay the rates. Householders could be reimbursed up to 100 per cent of the fees paid until 1988 when the maximum rebate amount was capped at 80 per cent.

Fig. 1 - Stickers from the Socialist Workers Party protesting against the Poll Tax

Problems with the domestic rates system

Thatcher believed taxing only the householder was an unfair tax system. Let us consider an example.

Thatcher also found fault with the generous rebate system, which resulted in eight per cent of the population paying nothing and another nine per cent paying virtually nothing in domestic rates. In her view, this meant citizens were not holding their councils accountable for the funds spent and the services provided, as fewer and fewer people were personally contributing to the rates.

Domestic rates were widely unpopular because they hit poorer families the hardest. Lower-income families paid a higher percentage of their income than higher-income families, even though higher-income families generally lived in higher-value properties taxed at a higher rate than those of lower-income families.

The Adam Smith Institute

Douglas Mason of the Neoliberal think tank Adam Smith Institute proposed the idea of a fixed-rate per-capita tax. The idea was that such a tax would raise a larger sum for local governments because more people were eligible to pay the Community Charge (38 million) instead of the 14 million who paid local taxes before the policy was adopted.

Thatcherism

The ideology of Margaret Thatcher is known as ‘Thatcherism’. The Poll Tax is a Thatcherite policy because it relies on the Thatcherite ideal of individual responsibility. According to Thatcher, individuals must take responsibility for their own lives and contribute to society to benefit from it.

Thatcher recognised that under the old rating system, many residents of the United Kingdom benefited from local government services without contributing, as the responsibility for paying domestic rates rested solely with householders.

Fig. 2 - Margaret Thatcher

Poll Tax facts

The motivations for the Poll Tax were as follows:

• Raising more funds for local councils, since more adults had to pay the Poll Tax.

• Providing a fairer approach to household charges, since everyone living in a council area would pay for the council’s services they used, such as waste collection and street cleaning.

• Holding councils accountable: if all residents of a council area have to pay, they become ‘customers’ who can demand quality services from their councils, thus holding them accountable.

• Voting out Labour-led councils: by making local councils accountable to their electorates, Thatcher aimed to ensure that voters dissatisfied with how taxpayers’ money was being spent voted out of office the high-spending Labour-led councils.

Description of the Poll Tax

The Community Charge was a flat-rate, per-capita tax payable by all adults over 18. All 38 million adults eligible to vote in general elections in the UK had to pay the tax, which is why it is called a ‘poll tax’; it was about taxing people and not property.

In 1987, the government had announced the average amount of council tax payable would be £180 per person per year. However, in 1990, the first year of its implementation in England, the average Community Charge tax was about £360 per person per year.

Exemptions and reductions

Some demographics were exempt, such as diplomats, convicted persons, and religious communities. There were reductions of up to 80 per cent for students and benefit claimants.

Transitional relief allowances were introduced to limit the initial amount of Poll Tax a household had to pay to mitigate the amount lost in the transition from one tax system to another.

Nevertheless, every adult – except those exempt from the tax – still had to pay at least 20 per cent.

Problems with the Poll Tax

While the Poll Tax intended to replace the regressive domestic rates system, it became an even more regressive tax.

Many considered the Poll Tax regressive and unfair. The tax hit low-income individuals and families the hardest because all adults had to pay the same amount regardless of income. By default, the Poll Tax took a larger percentage of low-income individuals than high-income individuals.

Poll tax example

Collecting the Poll Tax was also much more difficult and costly. The collection of domestic rates was easier in comparison, as houses and their owners could be easily identified. However, it was more difficult to reach all adults in the UK (especially those who lived in campervans or moved frequently) and get them to register for and pay the Poll Tax. It was estimated that collecting the Poll Tax cost two and a half times as much as collecting domestic rates.

Opposition to the Poll Tax

The Poll Tax faced opposition from all sides: by its own party, opposition, and widespread public disapproval throughout the UK. The exemptions and reductions the government introduced did little to appease the public’s discontent.

‘Can’t pay, won’t pay’ campaign in Scotland

When the Poll Tax was introduced in Scotland, the Scots were the first to rebel against it. The ‘Can’t pay, won’t pay’ campaign was an anti-Poll Tax campaign by the Scottish National Party (SNP), which focused on non-registration and non-payment.

The introduction of the Poll Tax in Scotland further increased the SNP’s popularity, as its arguments for the perceived ‘trial-run’ of the Poll Tax policy in Scotland strengthened the devolving government powers there.

Some 4 million Scots refused to pay the levy.

Fig. 3 - anti-Poll Tax stickers from Luton in 1990 use the same slogan as the Scottish anti-Poll Tax campaign

Poll Tax demonstrations

The initially peaceful protests against the Poll Tax quickly turned violent. While only 60,000 protesters were expected, 200,000 people turned out for the demonstration in Trafalgar Square on 31 March 1990.

Poll Tax riots

The protests saw scuffles and brawls between demonstrators and police, which escalated into a riot: cars were torched, and stores looted. Police arrested 339 protesters.

The Poll Tax and the fall of Margaret Thatcher

Thatcher had faced opposition in the lead-up to implement the Poll Tax but not like the one she would face after its implementation.

The strong convictions that earned Thatcher the admiration of members of her party were also what brought about her downfall. Even in the face of staunch opposition from her party (Conservative MPs such as Edward Heath and Michael Heseltine were two of the tax’s primary opponents), Thatcher refused to budge from her policies. This earned the Poll Tax a reputation as Thatcher’s hubris, as she had too much confidence in her convictions and pushed them too far.

Fig. 4 - Robert S. McNamara with Edward Heath

The government’s popularity declined rapidly during this period, primarily due to the Poll Tax. Thatcher had become so unpopular that the Conservatives began to fear losing the next general election. This prompted Michael Heseltine to question her leadership.

In November 1990, Thatcher won the first ballot of the leadership election, but Heseltine received enough votes to call a second ballot, prompting Thatcher to resign on 28 November 1990.

The end of the Poll Tax

John Major replaced Margaret Thatcher as Conservative leader after her resignation. Major, eager to separate the Poll Tax from the Tory party, promised to abolish the charge.

Fig. 5 - British PM John Major

On 21 March 1991, the abolition of the Poll Tax was announced. In 1993, the Council Tax system replaced the Poll Tax system, taking into account property value according to different bands of value. The Council Tax system is still in effect today.

¹Anthony King and Ivor Crewe, The Blunders of our Governments, 2013