Fed up with fat-cat public sector salaries? Make local councils self-financing.
The trouble is that councils have little incentive to reduce their spending when three quarters of their revenue comes from Whitehall. If they cut their costs by 20 per cent, it translates into only a five per cent reduction in council tax. Those which have been the most profliagate are rewarded: the more deprivation their policies create, the more money they attract in the form of welfare payments. Some Labour councils employ staff whose sole task is to encourage local people to claim benefits. Conversely, those which have economised find that, when a general reduction of the block grant is applied, they have less room for manoeuvre than the wastrels.
The solution? Make local authorities largely self-financing, ideally by replacing VAT with a Local Sales Tax, whose rate would be set at county or metropolitan level. Because everyone would pay it (to the extent that we all buy things), everyone would have an interest in reducing costs. And competing tax jurisdictions would give Britain something it had never known before: downward pressure on rates.
My comment: I would vote for that.
Read the full story from the source The Telegraph