The Reform of British Local Government Finance: the limits of local accountability

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Abstract
In Britain the government is proceeding with legislation to replace domestic rates by a poll tax payable by all adults, with non-domestic rates becoming an assigned revenue. Combined with the conversion of all central grants into fixed grants this ensures that local domestic taxpayers will pay the full marginal cost of extra spending in each local authority. This paper argues that the regressive nature of the poll tax means that local authorities will reduce the level of local taxation, which will be replaced by increased central grants. Changes in central grants will become the dominant determinant of changes in each local authority’s expenditure and, thus, the local accountability delivered by the new system will be extremely limited.

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