In retrospect Margaret Thatcher should probably have come unstuck sooner. By the end of the 1980s she’d been in power for a decade and somehow managed to become the most polarizing figure in Britain. Some saw her as the greatest Prime Minister since Churchill, while for others she was the most hated person in the UK. Even today looking back she still excites a fierce debate over her legacy
Putting all of this to one side, there is no getting away from the fact that she won three elections in a row and was seen as a major asset for the Conservative Party. However all of this changed with the introduction of the Community Charge (or Poll Tax) in 1989. Up until this point UK citizens paid for local council services under a system known as the ‘rates’. Under the rates people paid tax based upon the value of their property. Thatcher’s new Community Charge changed this to the number of people living in a household. This meant that if you lived on your own in a house you probably paid a lot less; if a lot of people lived together in a house then collectively they’d pay a lot more. It was immediately pointed out by the Labour Party and others that this was a regressive tax, shifting the burden from the better off in society to the poor. Thatcher saw it as one of her flagship policies though and decided to personally promote it up and down the country. The tax, quickly dubbed the ‘poll tax’, was launched in Scotland for 1989/90 and in England and Wales in 1990/91.
The unpopularity of the poll tax took a lot of people by surprise. It usually takes quite a lot to get the British protesting out in the streets but taxes is one of those issues that strikes a chord with everybody. The protests quickly became a national issue with large-scale riots in London and a non-payment campaign. By 1991 several million people hadn’t paid and as a result VAT had to be put up by two and a half per cent, a decision that remains with us to this day. It didn’t help of course that a lot of the British population is highly mobile, making it difficult to work out how many people were living in a household at any one time.
The Conservative’s ratings nose-dived fairly quickly and many began to mutter that they should perform a quick u-turn on the poll tax before it was too late. However Thatcher made it clear in several speeches that this was something she wasn’t going to compromise on. In the end she was forced from office by her own party who decided that when it came down to a straight choice between loyalty to their leader and being re-elected, electoral survival came first. The fact that her abrasive style of leadership had alienated many around her didn’t help matters either. Thatcher joined the House of Lords, penned her memoirs and spent most of the next decade sniping at her successor John Major. The lesson she left for both parties though was very clear, if you are going to change the tax system in any way be incredibly careful about how you do it. It could be argued that the direct legacy of this was the ‘stealth’ tax, where parties try to increase taxation in a way that no one notices, a policy that has proven effective for both Labour and the Conservatives in recent years.
Here is a short video outlining the genesis of the Poll Tax and where it went wrong: