First off this week, a confession. Thanks to a typing error, I managed to misrepresent Labour's tax policies in last week's column by implying that people earning £20,000 a year paid the same rate of tax as those earning £2m. They don't, of course, with the top rate of tax kicking-in at around £37,000, and the original figure should actually have read £40,000. Sometimes, these sorts of mistakes can be amusing - such as when an edition of the Bible published in 1632 transcribed the Seventh Commandment as: "Thou Shalt Commit Adultery." But in the heart of a modern election campaign it's a bit more serious than that, so apologies to the Labour Party and, more importantly, to any readers who were misled. Staying with the broad subject of tax, though, the future of the council tax has loomed large in the week's campaigning with all three of the main parties setting out their stalls on the issue. There was a time when local government finance used to be one of those dry-as-dust subjects of interest only to political anoraks and council finance officers - but no longer. The poll tax helped bring down Margaret Thatcher's government in 1990, and the future of the council tax which replaced it in 1992 has been steadily rising up the political agenda for years. The reason is simple, in that as more and more of the costs of local government have been piled on the shoulders of local taxpayers, the council tax is now bearing a load it was scarcely built to bear. Of the three main parties, the Conservatives' plans for the council tax are the most, well, conservative - and, it has to be said, the least socially just. On the plus side, they want to give pensioners a 50pc rebate on their bills, easily trumping the one-off £200 payment announced by Chancellor Gordon Brown in his Budget last month. But Tory leader Michael Howard's plan to scrap the forthcoming revaluation of council tax bands has no higher rationale beyond pure electoral self-interest. He knows perfectly well that the changes in property values over the past 15 years are likely to see many more properties in the Tory-voting areas of the South reclassified into the highest tax bands. What the Conservatives are seeking to do is protect voters in their South-East heartlands, at the expense of those in the North who stand to gain from the revaluation exercise. It was a shame that they could come out with something so obviously regressive and opportunistic in a week where their other tax announcements seemed designed to portray them in a kinder light. For instance, the proposal to encourage basic-rate tax payers to save more for their retirement by increasing tax relief on pension contributions from 22pc to 32pc will primarily help the lower paid. Labour's failure to address the pensions crisis is one of its most vulnerable flanks and the Tories are right to highlight it. But by the same token, you might have thought that the Government's abject record on regional economic disparities over the past eight years presented a similarly open goal to the Conservatives. That ought especially to have been the case in a week when, in the space of 48 hours, two reports showed the North-South divide getting wider. By contrast with the Tory plans, the Liberal Democrat proposal for a local income tax ought to be the most regionally redistributive of the various options on offer, given that it will be based on ability to pay. As average incomes in the North-East are the lowest in the country, it would seem to follow that average local income tax bills would be too. From the region's point of view, it is hard to see this as anything other than a great improvement, given that average council tax bills in the North-East are currently among the highest in the country. But local income tax is also the most expensive option in terms of extra administrative costs, as well as the most difficult to explain as party leader Charles Kennedy has found to his cost. New Labour, as is their wont, are being the most evasive of the three main parties about their plans for local taxation. They have already scrapped plans for the revaluation to include the creation of an even higher tax band and will not give a categorical answer one way or another on local income tax. Furthermore, the Government's record on local government finance reform over the past eight years hardly inspires great confidence. They came in promising to scrap the old Standard Spending Assessment and replace it with a fairer system - but it took them six years to do it and the end result was a damp squib. But as the campaign passes its halfway stage I suppose the wider question is: is any of this making any difference to the parties' overall standing? After pinning down the Tories over the economy in the first two weeks of the campaign, Tony Blair and Gordon Brown appear to have put Labour on course for a third successive landslide. My gut feeling remains, though, is that it won't be quite as straightforward as that, and that there could still be surprises on polling day. In the end, the voters will have to make a judgment on the Prime Minister himself - and it is that to which I will accordingly turn my attentions in next week's final pre-election column. | 
