Margaret Thatcher and the Poll Tax
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Margaret Thatcher was the first Woman prime minister of the United Kingdom (U.K.). She served three terms as Prime Minister from 1979–1990. Thatcher held an idea that would fundamentally change the U.K. tax system; this idea known as the poll tax would ultimately lead to Thatcher’s ouster as Prime Minister.
The U.K. was under a rating system of taxes before Thatcher came in office. The rating system is based on the rental value of a house instead of a person’s income. So if a family of 6 adults lived in a house, only the owner of the house would be taxed the rental value of the home. The tax was used to fund local government. This rating system had been in place since the 17th century. Before Thatcher became Prime Minister, she introduced a plan to abolish the rating system of tax in 1974. This plan was part of the Conservative’s party manifesto for the 1974 elections, an election the conservatives would lose.
Fast Forward to 1986 and Margaret Thatcher is now Prime Minister of the U.K. and in her second term. The Conservatives introduced the concept of the poll tax. The poll tax was a fixed tax per adult resident, with a reduction for poor people. Think of the poll tax as similar to the U.S. tax system. The conservatives included the poll tax proposal as part of their manifesto for the 1987 elections. Think of a manifesto as a U.S. candidates stump speech. It’s a policy that the candidate or party is proposing to get passed as law if they get elected. The conservatives won the U.K. election for a 3rd straight time in 1987. The legislation that introducing the poll tax was passed in 1987. The new tax system would start in Scotland first, then Great Britain and Wales later. The law would add a tax split of 100/ 20 %. Students and the unemployed were only taxed at 20% while the employed was taxed at 100%.
The new tax encountered a lot of administrative and enforcement issues. In towns with a substantial mobile population, like university towns, the tax was hard to enforce because people came and went before the tax bill was due. In some other cities, there was a big shared housing market. Even the landlords didn’t know who exactly was living in the houses. If the landlord didn’t know, you know the government had no idea as well, Some large families who occupied small homes saw their tax rates go up considerably.
The tax change brought a massive resistance effort. People criticized the law as unfair and burdensome to those who were less off. Another critique was the law saved the rich money while moving the burden of the taxes to the poor (sounds a lot like U.S. tax policies under Republican presidents right?). One of the most prominent opposition groups was the All Britain Anti Poll Tax Federation (APTU). The APTU called for mass non-payment of tax bills. As the implementation of the tax law in Great Britain got closer, more and more protests took place. On March 31, 1990, between 70,000–200,000 gathered to protest the tax. The protest drew way more people than the organizers, and the police anticipated, and things got out of hand. One hundred thirteen people were injured, and 340 people were arrested. Over 100 police needed treatment for injuries. This event and other similar smaller ones are collectively known as the tax riots. A large number of people flat out refused to pay the tax. In some areas, the number of people who didn’t pay was as high as 30%. With so many people not paying it was hard for the government to enforce everyone to pay.
With all this discontent going on about the poll tax, the Conservative party started thinking about the next election. Early polls showed the Labour party with a strong lead over the Conservative party mainly due to the poll tax issue. Some conservative part members considered abolishing the poll tax, but they knew Thatcher would never go for that while she was the Prime Minister. Thatcher was challenged for leadership of the conservative party by Michael Hesteline in November of 1990. Thatcher won the challenge by 50 votes, but the margin missed the threshold to avoid a second vote. Thatcher consulted with her cabinet who could see the political winds of change coming. On November 22, 1990, Thatcher announced she was resigning as Prime Minister after more than a decade in office. John Major, her successor as leader of the conservative party, quickly announced that he would abolish the poll tax. By the time of the 1992 general election new legislation had passed that replaced the poll tax with the council tax. This gesture saved the 1992 election for the conservatives as they won a 4th straight election. The Council tax closely resembled the rates tax with a few tweaks.
Thatcher returned to be a constituency parliamentarian before retiring from politics for good after the 1992 elections.
Mistakes Were Made:
There is a logical saying that “The map is not the terrain.” It means that the map doesn’t show the whole landscape or unforeseen dangers that may lurk in an area. All the map does is give you an overview of the region. This poll tax was a matter close to Thatcher’s heart as you can see she wrote about before she became Prime Minister. When she got power and the backing of her party, she was intent on making this idea law. Thatcher and her people could only see or think about all the good the new tax structure would bring to the U.K. Unfortunately they didn’t foresee how difficult the new tax plan was going to be to implement and more importantly how much opposition there would be to such an idea. One would think a significant party would do some polling beforehand before introducing some major legislation like that right? It appears the Conservative party did no such thing. Thatcher and her party were only looking at the map and seeing what they wanted to know from it. If they got out in the terrain before introducing the bill, they would have seen that the law was going to be challenging to implement and that it would be wildly unpopular. Even with all of this, Thatcher could have saved herself by cutting bait on the law after it became readily apparent that the law was vastly unpopular.
Thatcher was a woman of her beliefs and believed in staying course no matter what. You have to admire her ethics, but it was terrible politics and led to her being forced out as Prime Minister. It put a damper on an otherwise stellar political career well depending on what side you are on it may be stellar or not to you.
One of the main lessons of this story is to think through all the consequences of your actions before implementing it. You can’t just think about the projected ending you want to happen; you have to also think about what if things go badly, do you still want to go through with it? It’s a lesson British Prime Ministers are still learning as we see with former Prime Minister David Cameron. Cameron brought up a referendum vote on the U.K. involvement with the European Union (E.U.). Cameron thought the public would side with him in his view that the U.K. would stay with the E.U. just with some significant tweaks. The people instead voted to leave the E.U. in whole and Cameron was forced to resign as Prime Minister. Once again, history repeats itself.
Originally published at https://mwmblog.com on June 3, 2019.
