Poll Tax

Prime Minister Margaret Thatcher introduced the Community Charge or Poll Tax in Scotland in 1989 and in Wales and England in 1990. The tax replaced domestic rates with a new way of providing funds to local authorities: levying a compulsory per capita, fixed-rate tax from all adult residents, with the exact amount set at the local level. The Poll Tax was one of the main proposals of the 1987 Conservative Manifesto.

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Table of contents

    There is historical consensus that the unpopularity of the Poll Tax contributed significantly to the end of Margaret Thatcher’s tenure, eventually leading to her resignation in 1990. As a result of the Poll Tax, Thatcher faced opposition from across the political spectrum, and riots against the Poll Tax broke out across the UK in March 1990.

    The Council Tax replaced the Poll Tax in 1993 and is assessed according to the estimated market value of a property and different bands of value.

    Poll Tax history

    The idea of a community charge originated with the Adam Smith Institute. Thatcher adopted it as a more lucrative alternative to domestic rates.

    The old domestic rates system

    The Poll Tax was intended to abolish the old domestic rates system, which provided funds for local council services by taxing property rather than people, i.e., only the householder had to pay the rates.

    Householder

    The householder is the head of a household who either owns or rents the property in which they live.

    The old tax system relied on the propertys rental value, that is, how much the landlord could charge to rent it to potential tenants. Rebates were introduced for those who could not afford to pay the rates. Householders could be reimbursed up to 100 per cent of the fees paid until 1988 when the maximum rebate amount was capped at 80 per cent.

    Poll Tax Stickers from the Socialist Workers Party protesting against the Poll Tax StudySmarterFig. 1 - Stickers from the Socialist Workers Party protesting against the Poll Tax

    Problems with the domestic rates system

    Thatcher believed taxing only the householder was an unfair tax system. Let us consider an example.

    In a one-person household, the householder would be responsible for paying the rates. Only the householder would have to pay the tax in a household with five adults, even though the other four residents would also benefit from council services the municipality provided.

    Thatcher also found fault with the generous rebate system, which resulted in eight per cent of the population paying nothing and another nine per cent paying virtually nothing in domestic rates. In her view, this meant citizens were not holding their councils accountable for the funds spent and the services provided, as fewer and fewer people were personally contributing to the rates.

    Domestic rates were widely unpopular because they hit poorer families the hardest. Lower-income families paid a higher percentage of their income than higher-income families, even though higher-income families generally lived in higher-value properties taxed at a higher rate than those of lower-income families.

    The Adam Smith Institute

    Douglas Mason of the Neoliberal think tank Adam Smith Institute proposed the idea of a fixed-rate per-capita tax. The idea was that such a tax would raise a larger sum for local governments because more people were eligible to pay the Community Charge (38 million) instead of the 14 million who paid local taxes before the policy was adopted.

    Thatcherism

    The ideology of Margaret Thatcher is known as ‘Thatcherism’. The Poll Tax is a Thatcherite policy because it relies on the Thatcherite ideal of individual responsibility. According to Thatcher, individuals must take responsibility for their own lives and contribute to society to benefit from it.

    Thatcher recognised that under the old rating system, many residents of the United Kingdom benefited from local government services without contributing, as the responsibility for paying domestic rates rested solely with householders.

    Poll Tax Margaret Thatcher StudySmarterFig. 2 - Margaret Thatcher

    Poll Tax facts

    The motivations for the Poll Tax were as follows:

    • Raising more funds for local councils, since more adults had to pay the Poll Tax.
    • Providing a fairer approach to household charges, since everyone living in a council area would pay for the council’s services they used, such as waste collection and street cleaning.

    • Holding councils accountable: if all residents of a council area have to pay, they become ‘customers’ who can demand quality services from their councils, thus holding them accountable.

    • Voting out Labour-led councils: by making local councils accountable to their electorates, Thatcher aimed to ensure that voters dissatisfied with how taxpayers’ money was being spent voted out of office the high-spending Labour-led councils.

    Description of the Poll Tax

    The Community Charge was a flat-rate, per-capita tax payable by all adults over 18. All 38 million adults eligible to vote in general elections in the UK had to pay the tax, which is why it is called a ‘poll tax’; it was about taxing people and not property.

    In 1987, the government had announced the average amount of council tax payable would be £180 per person per year. However, in 1990, the first year of its implementation in England, the average Community Charge tax was about £360 per person per year.

    Key differences between the Poll Tax and domestic rates

    Domestic rates

    Poll Tax

    A tax on property.

    A tax to be paid by individual adults.

    A rating system based on the rental value of the householder’s property.

    A flat-rate tax that did not take into account property value.

    Only 14 million householders had to pay the tax.

    Every adult in the United Kingdom had to pay it, which means 38 million adults would be liable to pay the Poll Tax.

    Exemptions and reductions

    Some demographics were exempt, such as diplomats, convicted persons, and religious communities. There were reductions of up to 80 per cent for students and benefit claimants.

    Transitional relief allowances were introduced to limit the initial amount of Poll Tax a household had to pay to mitigate the amount lost in the transition from one tax system to another.

    Nevertheless, every adult except those exempt from the tax still had to pay at least 20 per cent.

    Problems with the Poll Tax

    While the Poll Tax intended to replace the regressive domestic rates system, it became an even more regressive tax.

    Many considered the Poll Tax regressive and unfair. The tax hit low-income individuals and families the hardest because all adults had to pay the same amount regardless of income. By default, the Poll Tax took a larger percentage of low-income individuals than high-income individuals.

    Poll tax example

    Under the old domestic rate system, owners of the properties with the highest rental value used to have to pay thousands in domestic rate tax. With the Poll Tax, the owners of luxurious homes could reduce their expenses by thousands, as they now only have to pay the same flat-rate tax as all other residents of a local area, not exceeding several hundred pounds.

    Collecting the Poll Tax was also much more difficult and costly. The collection of domestic rates was easier in comparison, as houses and their owners could be easily identified. However, it was more difficult to reach all adults in the UK (especially those who lived in campervans or moved frequently) and get them to register for and pay the Poll Tax. It was estimated that collecting the Poll Tax cost two and a half times as much as collecting domestic rates.

    Historiography

    Political scientists Anthony King and Ivor Crewe argue in their book The Blunders of our Governments:

    ‘The Thatcher government’s introduction of a poll tax in the 1980s was a colossal blunder... The poll tax failed to achieve its objectives, led to rioting in the streets, wasted many millions of pounds, occasioned much human misery and ultimately cost the prime minister her job.’

    Opposition to the Poll Tax

    The Poll Tax faced opposition from all sides: by its own party, opposition, and widespread public disapproval throughout the UK. The exemptions and reductions the government introduced did little to appease the public’s discontent.

    ‘Can’t pay, won’t pay’ campaign in Scotland

    When the Poll Tax was introduced in Scotland, the Scots were the first to rebel against it. The ‘Can’t pay, won’t pay’ campaign was an anti-Poll Tax campaign by the Scottish National Party (SNP), which focused on non-registration and non-payment.

    The introduction of the Poll Tax in Scotland further increased the SNP’s popularity, as its arguments for the perceived ‘trial-run’ of the Poll Tax policy in Scotland strengthened the devolving government powers there.

    Some 4 million Scots refused to pay the levy.

    Poll Tax anti-Poll Tax stickers from Luton in 1990 use the same slogan as the Scottish anti-Poll Tax campaign StudySmarterFig. 3 - anti-Poll Tax stickers from Luton in 1990 use the same slogan as the Scottish anti-Poll Tax campaign

    Poll Tax demonstrations

    The initially peaceful protests against the Poll Tax quickly turned violent. While only 60,000 protesters were expected, 200,000 people turned out for the demonstration in Trafalgar Square on 31 March 1990.

    Poll Tax riots

    The protests saw scuffles and brawls between demonstrators and police, which escalated into a riot: cars were torched, and stores looted. Police arrested 339 protesters.

    The Poll Tax and the fall of Margaret Thatcher

    Thatcher had faced opposition in the lead-up to implement the Poll Tax but not like the one she would face after its implementation.

    The strong convictions that earned Thatcher the admiration of members of her party were also what brought about her downfall. Even in the face of staunch opposition from her party (Conservative MPs such as Edward Heath and Michael Heseltine were two of the tax’s primary opponents), Thatcher refused to budge from her policies. This earned the Poll Tax a reputation as Thatcher’s hubris, as she had too much confidence in her convictions and pushed them too far.

    Poll Tax Robert S. McNamara with Edward Heath StudySmarterFig. 4 - Robert S. McNamara with Edward Heath

    The government’s popularity declined rapidly during this period, primarily due to the Poll Tax. Thatcher had become so unpopular that the Conservatives began to fear losing the next general election. This prompted Michael Heseltine to question her leadership.

    In November 1990, Thatcher won the first ballot of the leadership election, but Heseltine received enough votes to call a second ballot, prompting Thatcher to resign on 28 November 1990.

    The end of the Poll Tax

    John Major replaced Margaret Thatcher as Conservative leader after her resignation. Major, eager to separate the Poll Tax from the Tory party, promised to abolish the charge.

    Poll Tax British PM John Major StudySmarterFig. 5 - British PM John Major

    On 21 March 1991, the abolition of the Poll Tax was announced. In 1993, the Council Tax system replaced the Poll Tax system, taking into account property value according to different bands of value. The Council Tax system is still in effect today.

    Poll Tax - Key takeaways

    • The Community Charge, also known as the Poll Tax, was introduced in Scotland in 1989 and in England and Wales in 1990. It sought to tax the 38 million adults legible to vote in general elections in the UK at a rate of £180 per person per year. Reductions and transitional allowances were introduced to mitigate the cost.
    • The domestic rates system was a tax on the property that provided funds for local councils.
    • The domestic rates were considered regressive, and rebates were introduced to mitigate costs for low-income households.
    • The Poll Tax was a crucial Thatcher Party measure that led to the fall of Margaret Thatcher.
    • Thatcher got the idea for the fixed-rate, per-capita Community Charge from the Neoliberal think-tank Adam Smith Institute. The idea fit well with the ideology of Thatcherism because it promoted individual responsibility.
    • The main motive for the Poll Tax was to make local councils accountable to the electorate, who would thus become ‘consumers’ of their services.
    • The main problem with the Poll Tax was that it was an unfair, regressive tax. Citizens and many Conservative Party members agreed on this. The aggressiveness of the Poll Tax caused the public to rebel against it, leading to ‘Can’t pay, won’t pay’ campaign and the 1990 riots against the Poll Tax.
    • Michael Heseltine, who opposed the Poll Tax, challenged Thatcher’s leadership in November 1990 and received enough votes to call a second ballot. Thatcher was driven to resign, thus bringing about 11 years of the Thatcher government.

    ¹Anthony King and Ivor Crewe, The Blunders of our Governments, 2013

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    Frequently Asked Questions about Poll Tax

    What is a poll tax?

    A poll tax is levied on every liable individual at a fixed sum, regardless of income. The term ‘poll’ means head, so it is also known as a ‘head tax’. The Community Charge introduced in 1989 by Margaret Thatcher came to be known as ‘the Poll Tax’ as it was by nature a poll tax: it sought to charge every individual ‘head’ the same amount.

    When was the Poll Tax introduced?

    The Poll Tax was introduced in 1989 in Scotland, and in 1990 in England and Wales. Prime Minister Margaret Thatcher introduced the Poll Tax and it was a highly unpopular policy.

    What is the difference between the Poll Tax and Council Tax?

    Council Tax replaced the Poll Tax in 1993. The difference between the Poll Tax and the Council Tax is that Council Tax relies on the estimated value of properties according to different bands of value. On the other hand, the Poll Tax was a flat-rate, per-capita tax, meaning that every adult had to pay the same amount, irrespective of the value of the property they occupied.

    When did Poll Tax end?

    The policy was abolished in 1991 and replaced by Council Tax in 1993.

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