PRESS RELEASE

2 April 2004

Ottaway exposes LibDem local tax bombshell

Richard Ottaway, Conservative MP for Croydon South has attacked plans by the Liberal Democrats to levy a new local income tax on residents across Croydon. Conservatives have published research showing that a local income tax would mean an average household in Croydon paying £691 a year more in tax. A local income tax is being considered by the Government in its review of local government funding and is an official Liberal Democrat policy.

Analysis by Conservatives, updated post-Budget for the 2004-05 tax regime, has exposed the fact that a typical household in Croydon would pay more under the system.

This coming year, households in Croydon will be paying an average council tax bill of £1,060 a year. To raise the same amount of money, this would require a local income tax rate of 4.2%. Yet a typical household (with one person on average male earnings and one on average female earnings) would end up paying a yearly local income tax bill of £1,751 - which even if replacing council tax, would still entail an additional £691 a year in tax.

Richard Ottaway explained: -

"Liberal Democrats want a return to 1970s-style rates of income tax, through a national top rate of income tax of 50 per cent and also a local income tax of 4.2 pence in every pound. This could mean £691 a year extra for a typical two-earner household in Croydon.

"Local income tax sounds superficially attractive - but it would do nothing to address the underlying problem of fiddled Whitehall funding. Indeed, local income tax could make Croydon council more dependent on Whitehall handouts, not less. Rather than robbing Peter to pay Paul, we need a fairer deal for Croydon from the Government."

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