Thatcherism, by Kim, Changhyun, Oct 2005


Poll Tax


As the leader of the Conservative Party in opposition, Thatcher had promised to reform the system of rates, the local tax on homes and businesses. By 1987, real estate values had dramatically risen, and there were steep increases in the rates that businesses and homeowners had to pay in regions where realestate prices had been reevaluated. Even in areas where there had been no reevaluation large increases in the rates was feared.
Thatcher sought a drastic reform of the entire system. As a believer of small government and capitalism, she wanted to reduce local government spending. She had reduced central government support to the local governments, but the local governments responded by making the rates higher. Thatcher felt that the only way to achieve her goal was to make everybody pay for the local government. According to her theory, the people would pressure the local governments to reduce spending and cut the rates.
In 1988, a bill replace the rates on homes in England and Wales with uniform community charge (poll tax), on every person over eighteen. Reductions were available for low income people, but for the majority of the population, the amount paid would be the same regardless of income. If a local government spent too much, it would have to raise the poll tax levied on its people. Thatcher insisted on the poll tax, despite heavy opposition in the Cabinet, the Parliament, and the country. When the vote was taken in January 1990, 31 tories were against it. It passed nevertheless, and came into effect in March.
The poll tax sparked a storm of protest. Homeowners were happy to be relieved from the rates, but 73% of the households and 82% of the individuals had to pay more poll tax than they had paid before in the rates. The poll tax averaged 400 pounds per household, and many low-income people were charged with poll tax they could not afford. Families who lived in rented homes were hardest hit by the poll tax, since they had not paid any rates at all.
The rates had fallen heavily on rich people who had expensive homes. Another reason why most families had to pay more is because Thatcher further cut support grants to the local governments.
Margaret Thatcher wanted the people to vent their anger on the local governments, but the people vented their anger at the poll tax. In March, 1990, a demonstration against the poll tax in Trafalgar Square resulted in a violent riot where cars were burnt and more than 300 police officers injured.
Many Conservative MPs, especially the back benchers, complained against the poll tax. Despite this, she flatly refused to repeal the poll tax. Her opinion was that the wealthy paid their share of taxes in other ways, while renters had been receiving government services without paying for them.
Her firm support for the poll tax, a public relations disaster, led many Conservative MPs to think that the party could not win the next general elections with Thatcher as the leader. Furthermore, she had made many enemies with the Conservative Party through her domineering manner towards cabinet members and clear willingness to make all important decisions herself. Exactly how she was led to step down is beyond the scope of this paper, but on November 22, 1990, Thatcher tearfully informed the cabinet of her intention to resign, and then made a farewell speech in the House Commons about her achievements.

Kim, Changhyun
October 2005


EXTERNAL
FILES
Winter of Discontent, from Wikipedia
Thatcherism, from Wikipedia
National Enterprise Board, from Wikipedia
Margaret Thatcher, from Wikipedia
United Kingdom General Election 1979, from Wikipedia
Thatcherism 1979-91, from BBC England Timeline
Thatcherism 1979-90, from BBC British Timeline
The "British Disease", from BBC British Timeline
Thatcherism, from Economy Professor
Margaret Thatcher, from PBS
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