Origins
The abolition of the rating system of taxes (based on the notional rental value of a house) to fund local government had been unveiled by Margaret Thatcher when she was Shadow Environment Secretary in 1974, and was included in the manifesto of the Conservative Party in the October 1974 general election. In the 1979 election the Conservative manifesto stated that lowering income tax took priority over abolition of the rates, but the Government did find the time to publish a Green Paper, Alternatives to Domestic Rates, in 1981. This Green Paper considered a flat-rate per-capita tax as a supplement to another tax, noting that a large flat-rate 'poll tax' would be seen as unfair.
The 1980s saw a period of general confrontation between central government and Labour-controlled local authorities, that eventually led to the abolition of the Greater London Council and the six metropolitan county councils. The commitment to abolish the rates was replaced in the 1983 general election manifesto with a commitment to introduce the ability for central government to cap rates which it saw as excessive. This was introduced by the Rates Act 1984.
Although the ratings system was supposed to have regular revaluations in order to minimise discrepancies, the revaluations in England and Wales had been cancelled in 1978 and 1983. The Scottish revaluation of 1985/1986 led to a great deal of criticism and gave added urgency to rates reform or replacement.
The Green Paper of 1986, Paying for Local Government, produced by the Department of the Environment from consultations between Lord Rothschild, William Waldegrave and Kenneth Baker, proposed the Community Charge. This was a fixed tax per adult resident, hence the term 'poll tax', although there was a reduction for poor people. This charged each person for the services provided in their community. Due to the variations in the amount of local taxes paid and the amount of grant provided by central government to individual local authorities, there were differences in the amount charged between councils.
Read more about this topic: Community Charge
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