Council tax and shared taxation: increasing funds for local councils

Justice minister Owen Bonnici has ruled out the idea of a council tax which the Opposition says could benefit councils using a “shared taxation” system.  

The Opposition spokesperson for local government, David Agius said that the Nationalist party held that one of the ways to solve the financial issues for local councils would be the implementation of a shared taxation system in the country.

“We, as the Nationalist party, have made a number of concrete proposals that have, as yet, not been discussed further by the government,” Agius said.

“One of our proposals was to shift 10% of the already existing tax on car licences to local councils rather than to the government.”

Agius said that the party proposed that this figure would increase by 1% every year, until it reaches a maximum of 15%. 

“The proposal would ultimately lead to an added estimated €6 million for local councils to use as they choose,” Agius said, reiterating that the tax would not be a new one but merely a shift of an already existing tax.

The idea of shifting existing taxes is also very much in line with the words of Local Council Association president Marc Sant, who said that the idea of a new tax would inevitably be met with strong hesitation.  

Car licences were specifically targeted in the opposition’s proposals because issues like road maintenance fall under local councils’ responsibilities.

Agius also explained that the party had made other proposals, like that of waiving the Value Added Tax local councils are obliged to pay.

Using the locality of Siggiewi as an example of a locality with an average size and population, Agius pointed out that the acceptance of the two proposals mentioned for this locality could ultimately amount to €130,000 a year for the council. 

“This would be a particularly significant sum given that the playground which was accepted under the capital projects fund is expected to cost around €30,000,” Agius said. 

Agius added that the party was open to suggestions, like the idea to shift part of the tax paid by shops or hotels from the government to the local councils. 

“The Nationalist party hopes that the government will come to a decision or at least a reaction to the proposals we have made to try and solve some of the more salient financial issues for local councils,” Agius added.

“Funds like the capital projects fund aim to aid local councils in their work towards improving their localities and meeting the people’s needs,” Owen Bonnici said.

Asked whether the government would allow the creation of a council tax in the traditional sense, Bonnici said that the government would not agree to adding a new tax, but that initiatives like the capital projects fund were meant specifically to help local councils financially. 

Council tax is a system of taxation used in England, Scotland and Wales to fund local projects. The tax is implemented at specific periods when funding from the central government begins to wane, causing an interruption in certain services deemed essential to the running of a locality. The funds collected through this tax go into various projects, including the police, fire service, recycling, refuse collection, council leisure centres, park and ride schemes, maintenance of parks and open spaces and street cleaning among others.

The fact that local councils frequently need funds is unfortunately, universally accepted, and as a result many localities often have to forgo certain works for these reasons. 

“One way to battle this issue would be the imposition of such a council tax on our own shores however, the addition of yet another tax would undoubtedly not be welcomed by the public,” Sant said. “Discussions to this effect have so far focused on shifting existing taxes into local councils without adding new ones.”