Lancashire would be '£118m better off' under proposal for more income tax to be kept in the areas where it is raised
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The idea - contained in the recently-published “Funding Fair Growth” report by the Centre for Progressive Policy (CPP) - would devolve two percent of income tax receipts to local authorities.
Half of the total would be kept by the top-tier council in the area where it was generated, while 40 percent would be divvied out nationwide and the remaining 10 percent invested in rebuilding local government capacity in what the organisation calls “lagging areas”.
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Hide AdIllustrative modelling by the CPP estimates that, under the suggested scheme, Lancashire County Council would get an annual £118.7m boost to its coffers - the eighth-highest increase in the country.
Meanwhile, Lancashire’s two other top-tier authorities - the standalone councils covering Blackpool and Blackburn - would reap the rewards of the redistributive element of the proposal.
Almost 82 percent of Blackpool’s estimated extra £34m of revenue would come from the redistribution pot - more than any other area nationwide - with just £6.1m being generated by the additional one percent of locally-raised retained income tax cash.
Blackburn with Darwen Council would get a similar boost from redistribution, with almost 76 percent of its forecast extra £26.8m arising from that element of the proposal.
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Hide AdThere would be a more equal split between the two sources of extra funding in the case of the county council - with just over 52 percent coming from retention and the remainder from the retained share of revenue raised within its patch.
However, the deputy leader of Conservative-controlled County Hall is unconvinced about the blueprint. County Cllr Alan Vincent, who is also the cabinet member for resources, told The Gazette that while local authority budgets would seemingly get the massive uplift that many in local government have long called for, the resultant gap left in Whitehall’s coffers would have to be plugged.
“This [proposal] is nice in theory, but would leave a hole in central government finances which would have to be filled by raising tax in some other way - or, more likely, simply [by] reducing the amount they give in grant to local authorities, so the net effect would be neutral,” County Cllr Vincent suggested.
Blackpool Council was also approached for comment.
Under the current tax system, 95 percent of all taxation raised in the UK goes straight to the Exchequer.
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