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A state frequently levies tax on the goods and services bought by those who live within its jurisdiction. Some states even levy tax on basics like food and clothing. However, such taxes are levied once only at the time of purchase. I do not have to go on paying tax at a certain rate per week, per month or per year on the food I buy for as long as I keep it stored in my home. I am not evicted out of my clothes if I find myself unable to pay a weekly Clothing Possession tax, then find myself arrested for indecent exposure. If I buy a piece of furniture, I do not have to pay a regular monthly tax on it for as long as I continue to possess it. I own the food I buy. I own the clothes I buy. I own the furniture I buy. But, it seems, I do not own the house I buy - at least, not fully.
When I buy a house - even when I have paid off completely any mortgage I may have had on it - I still do not really own it. It is still not completely mine. It appears that the state has the right to charge me for the privilege of owning and living in my own house. Furthermore, the amount of money I have to pay for this privilege is decided entirely by the servants of the state. I have no say at all in the matter. And if I do not - or cannot - pay this tax, my possessions may be confiscated, I may be arrested and imprisoned, or I may even be cast out of my own home.
Though shelter be a basic human need without which one cannot survive, one is never actually allowed to own it absolutely. One will remain free, to live in the home one has bought and paid for, only for as long as one continues regularly to pay the full amount of the protection money demanded by the local State Mafia. In the modern capitalist state, ownership, where one's house is concerned, is a highly qualified term.
Each month, I have to pay an amount of money to the local authority for the privilege of living in my own home which I have fully bought and paid for. The amount I have to pay each month is a direct proportion of what is called the rateable value of my house.
This rateable value is the amount of money for which I supposedly could have rented out my house to a tenant during the particular year in the past which was selected by the government as the universal temporal datum. I don't know which year it was. It isn't particularly relevant.
The amount of this wholly hypothetical rent is based on an evaluation of the geographic location and setting of my house as well as the size and quality of the building itself. It was an arbitrary figure guessed at by government operatives who never even came to see the house, but who made their judgements by looking at maps and plans. It hardly merits a stamp of engineering exactitude.
The constant of proportionality by which the rateable value of one's house is multiplied to determine the monthly tax payments is adjusted each year to move upwards in order to keep pace with its rising market value. And herein lies the root of its unfairness. This is what makes it dangerous. Market value is determined by factors which are nothing to do with the house owner's income or his ability to pay this tax. It is determined entirely by forces over which he has absolutely no control or influence.
The current market value of my home is determined by two things:
The first was, for the most part, determined by its location and how much I could afford to pay for it. This in turn was determined largely by my income at the time. The second is determined by external economic forces and influences over which I have no control or influence whatsoever.
When I made the commitment to buy my house in 1972, it cost £8,600. It was located in a fairly small town with open fields beyond. Since then, the town has expanded and gained a fast electrified rail service to London. In consequence, it has been invaded by hoards of well-off nouveau-riche yuppies who use it essentially as a dormitory. Thus my house has become surrounded by a vast estate of high quality commuter homes. As a result, the market value of my house has been driven upwards in real terms to a level far beyond what it was when I bought it.
Decades ago, when it was the norm for a man to go out to work and his wife to stay at home, the price of houses was capped by what could be paid into a mortgage from a single income. When it became the norm for both partners of a marriage to go out to work, the market value of houses drifted upwards until they absorbed the extra which could be paid from their double income. This has had the effect of driving up the market value of my house even further and faster.
The effect of this 'double whammy' in the rise in its market value, has been to drive up exponentially the tax which the local authority levies on my house. Thus, because of circumstances beyond my control, I now have to pay vastly more house tax irrespective of whether my income has risen or fallen. Even if my income had remained the same, I would, by circumstances beyond my control, be involuntarily rendered far less able to afford this tax than I was when I originally committed myself to buying my house. What extra benefits have I gained in return for this vast increase in the tax levied on my house?
It is still the same house. It provides exactly the same facilities and benefits to my family as it did before. Its intrinsic value has not increased at all.
I still receive exactly the same services from the local authority. Their quality is still the same. The sizes of their operations have increased. That is because they now have a vastly increased population to serve. But this has by default provided them with a vastly increased number of homes, all contributing house tax. Economy of scale, one would think, should therefore enable them to reduce the tax on each house: not increase it.
The conclusion is that I have gained absolutely nothing in return for the vast increase in the tax levied on my house. In fact, I have lost.
There were once open fields beyond the end of our road. We used to gain enormous benefit from long walks in the open country. It was soothing to the mind and a comfort to the spirit. Since then we have also suffered the invasion of an army of nerve-driven car-speeding commuters into our once-peaceful locality. Now we are surrounded on all sides by literally hundreds of hectares of tightly crammed well appointed brick-built commuter kennels. Picking one's way to nowhere through the bland uniformity of their geometric streets as their inmates peer suspiciously at us from behind their net curtains is a torture to the mind and depressing to the spirit.
Our local environment has thus been severely degraded. This has precipitated a real and present deterioration in our quality of life.
My local authority has invested my house tax money well. They have apparently spent large amounts of it providing an environment to attract 'inward investment'. As a result, the local economy is supposed to have expanded enormously. Yet it has contributed nothing to my income from which I am expected to pay all this extra tax. In fact it has reduced my income. The influx of new people has meant that all local jobs have been devoured by these younger immigrants to the locality. And any market share I could hope to capture with a business has been conquered already by proprietors with the capital to hold onto it. This is probably why I have been unemployed for 10 years.
When the 'rates' were first introduced I suspect that they were just a small subscription which every member of the community could be reasonably expected to pay as a way of `pitching in' to meet costs relating to the local community as a whole. When I first got married, I received a rates bill every 6 months. Its size was never any concern. I simply wrote out the cheque, sent it off, and thought nothing more of it. At that time, rates were insignificantly small compared with an average person's income. This is doubtlessly why the originators of the rating system thought that the fact that rates were unrelated to the householder's income would never cause a problem. Over the 25 years that followed, however, the rates steadily consumed more and more of my income. By the mid-1980s, they became my overwhelming cause of nocturnal sleeplessness.
Establishing that the householder has sufficient income with which to pay his house tax has never been a prerequisite for charging it. Proof that a household does not have sufficient income from which to pay house tax has always been the burden of the tax-payer, rather than proof that the household does have sufficient income to be able to pay house tax being the burden of the tax-charger. As a result, house tax, as currently implemented, has become a grossly unfair and disparitous form of taxation.
Because of this, government has condescended to provide what it thinks is a safeguard to the individual against be taxed beyond what his income can stand. This safeguard has at different times gone under the names such as rates rebate, council tax benefit, and community charge benefit. It is simply a graduated reduction in the amount of house tax you have to pay according to how far your household's total income and savings are below certain prescribed thresholds.
However, being factually eligible for a reduction in the amount of house tax you have to pay, and being able to provide acceptable evidence of that eligibility, are two different things. The latter is subject to the whimsical interpretation of over-simplistic rules by low grade bureaucrats to whom the matter is one of professional disconnectedness: not one of potential hardship, homelessness, destitution and starvation.
Simple blind rules cannot possibly model the vast range of events and circumstances which affect a particular individual. Nor can the idiot tick-box forms used to assess those events and circumstances, convey to the agents of the State the necessary and sufficient details of their impact upon that individual. The individual is therefore left vulnerable to inadvertent ruin by the uncoordinated interpretations of rules by separate and disconnected government agencies.
Having been officially unemployed for over 10 years, I am exempt from having to pay council tax. However, there was a time in the early years of my business when this was not so. My income at the time was far below the threshold at which one supposedly should not have to pay any house tax. Nevertheless, because the idiot rules by which assessments were then made were unfit for their purpose, I was forced to pay the full amount. There was no way to avoid it.
After all, I cannot simply shave 20% off my house to reduce my rates by 20%: My only option is to sell my house and move to a cheaper one. But this incurs disproportionately large transfer costs which consume even more of the original capital. And there are yet other losses which are not represented by monetary quantities such as the of disruption to family routines within the household and the trauma of changing schools.
Nevertheless, I was almost forced to sell my home. I was nearly dispossessed of what I already 'owned' and had spent years paying for with money on which I had already paid income tax. My family were not only living in extreme financial hardship, but also under the constant threat of a visit from the bailiffs if ever we were unable to pay. But even if I had been forced to sell my house, I would still have had to buy another, whose `market value' would have undergone a similar level of artificially induced inflation. I would have gained nothing. The only gainer would have been the neuveau-riche invading commuter for whom it would have been conveniently vacated. Hence, by default, house tax is an effective means by which an invading army of richer commuters ethnically cleanses a developing locality of its poorer original inhabitants. It simply drowns them in a rising tide of market value. Ethnic cleansing is not an exclusively foreign phenomenon. Here it is simply effected by a more underhanded and covert means. And the ethnic divide is not racial or religious but economic.
This so-called 'rebate' system cannot guarantee protection to the individual against being dangerously and critically over taxed. In all fairness it is nothing more than an inadequate crisis-initiated attempt to patch-up a fundamentally unworkable system of taxation.
The intrinsic value of a house is a permanent or static quantity, like the distance between two places or the potential energy of a system. Assuming a house is neither enhanced nor deteriorates, its intrinsic value does not vary with time. Its market value does go up and down - mostly up. However, this is usually, and for the most part, due to changes in the surrounding area and in the value of money. But even market value is essentially a static quantity. It simply expands and contracts like a balloon being alternately squeezed and released by market forces.
House tax is different. It is a moving or dynamic quantity, like the speed with which one is travelling between two places or the kinetic energy of a system. It is not a measure of value, but of a rate of transfer of value. It is not money: it is a rate of flow of money. It is money per unit time. It is not £s: it is £s per week, per month or per year. The two things are as different as speed and distance. They are simply different. To levy a kinetic tax on static capital is mathematically unsound and systematically dangerous. It is as nonsensical as giving the speed of your car in kilometres instead of kilometres per hour.
Think of your capital as an amount of water in a tank. Part of this is fluid, but part of it is frozen. The fluid part is money. The frozen part is the market value of your house and your other permanent possessions like furniture. Think of your income as a steady flow of water coming in from a pipe above the tank. Imagine house tax as a leak through a hole in the side of the tank near the bottom. What you spend on living is the main out-flow at the very bottom.
The rate at which house tax drains your capital is a function of the amount of capital in the tank at the time. While income is greater than or equal to what you spend on living + your house tax, your capital will not diminish. However, if your income falls below the sum of these two things, your house tax starts to eat away at your savings. This continues until your savings fall below the threshold at which you become exempt from having to pay house tax.
The government considers this threshold mechanism to be adequate protection for the individual who may fall on hard times. But it isn't.
Firstly, the threshold of minimum capital (or savings limit), at which house tax exemption kicks in, is far below what the individual needs to be able to function fully as a member of the society in which he lives. He becomes inadequately fed and clothed. His mobility is severely curtailed. His means of communication deteriorate. His contacts evaporate. He can therefore no longer carry on a business or seek work effectively. House tax has eaten away the capital he needs to fuel these basic processes, and hence his only means of replenishing it. He will gladly supply unlimited personal effort, but house tax has eaten away his only means of transforming it into wealth. He is like a fire which, though in the presence of unlimited fuel, has become too small to sustain its own combustion.
Secondly, his safety from ruin depends on the proper functioning of the over-simplistic rules by which exemption is granted, and of the bureaucracy which expedites them. If, through a bureaucratic malfunction, exemption is not granted when it should be, house tax will first devour the remainder of the subject's savings and then proceed to devour his frozen assets. At first, he borrows liquid capital against his frozen capital to pay his house tax. This he will do in the hope that his fortune will change. But it can't: his only means of changing it has already been eaten away. Consequently he eventually has to realise his frozen capital by selling his home to pay off his borrowings.
Applying a kinetic tax to a static quantity like capital creates a mechanism which, left to itself, will drain the substance of a personal, family or business economy to nothing. It turns a personal, family or business economy into a leaking bucket where the size of the leak is set by authorities who are unconcerned with whether or at what rate the bucket is being refilled. If nothing is refilling the bucket then that personal, family or business economy simply bleeds to death. The only thing which stops people being squeezed out of existence this way in most cases is the fortuitous presence of a kinetic source of replenishment we call income. Where income is insufficient to replenish tax-on-capital, then tax-on-capital devours the capital itself.
The only fair way of taxing a static quantity is with a tax which is itself a static quantity: for example VAT which is levied once-only each time the capital value changes (which normally coincides with a change of ownership). Income tax and house tax, on the other hand, are not static quantities. They are not amounts of money: they are rates-of-flow of money. They are so much per week, per month, per year. They are time-related. They are first-order differentials with respect to time. They are kinetic quantities.
But house tax is a kinetic tax levied on static capital. It does not even tax the individual on the intrinsic value of what he owns, but on its extrinsic value determined by what the private, commercial and public community around him owns, and over which he has no control or influence. With tax, like everything else, you should match like with like. You must levy a kinetic tax like income tax only on a kinetic source of wealth like income. On static wealth, like capital or property, you should only levy static taxes, like VAT.
To remove this unfairness and constant source of personal oppression the state could do one of the following:
But in no circumstances, either by accident or design, should the possibility ever be able to arise, or be threatened, by which a family can be, by force of law, dispossessed of its established home. Sovereign possession of this basic need of life must be an inviolable human right of every family.