The challenge
The government wanted to replace local property taxes with a simpler system.
The case
In 1989 in Scotland and 1990 in England and Wales, Margaret Thatcher's government replaced local property taxes with the Community Charge, a flat amount per adult, so a millionaire and a cleaner in the same area paid the same. Many people refused to pay or dropped off the electoral register to avoid it, collection costs soared, and protests culminated in a riot in London in March 1990. The tax contributed to Thatcher's downfall and was replaced by the property-based Council Tax in 1993. In his March 1991 Budget, Chancellor Norman Lamont cut community charges by £140, funding the switch by raising VAT to 17.5 percent.
Why it didn't work
A tax seen as unfair is hard to collect, no matter how simple it looks. Ignoring ability to pay destroyed public consent.
Sources
- Butler, D., Adonis, A., & Travers, T. (1994). Failure in British Government: The Politics of the Poll Tax. Oxford University Press.
- Lamont, N. (1991). Budget Statement: Central and Local Taxation. House of Commons, Hansard, 19 March 1991.
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