Just got involved into a Tory v Lib Dem conflict over on Iain Dale's site. Iain's claiming that the average couple would be £634/year worse off, some fellow called James disputed that, saying that the couple would have to earn a total of £50k. Now, me and my flatmate don't earn anything like that, but I think that we'll be around £600/year worse off. So something's got to give.
Here's my calculations.
If £37,000 p.a equals £1,000 local income tax and £10,000 p.a. equals £114 local income tax then (as long as there's one rate) that means that the local income tax allowance is set at £6,526 and the tax rate at 3.28%.
Income Tax as a total brings in £127 billion. Source http://www.hm-treasury.gov.uk/media/92B/AC/pbr04_chap01_284.pdf
(the piechart on page 12). Income Tax allowance is set at £4,745 and if we say that there are 35 million income tax payers then the average income tax payer earns £21,239, paying £3,629 income tax.
If we use the same average figure for local income tax payers then the local income tax will only bring in £16.9 billion. which is much less than the £24 billion that council tax currently raises.
The only figure I've had to guess at is the number of taxpayers, but that doesn't change the net receipts as much as you would think, more taxpayers would use more allowances and bring the total take down slightly, 40 million taxpayers would bring in £16.6 billion, 30 million would pay £17.2 billion.
If there's anything anyone can add that I've missed, please help me out here.
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