Almost two years ago, around the time of city council leader Sir Albert Bore’s first jeremiads about our facing ‘the end of local government as we know it’, one revenue raising option in the news, supported by Sir Albert himself, was a hotel bed tax.
It wasn’t new. Sir Michael Lyons’ 2007 Inquiry into Local Finance had cited it as a means of raising revenue from tourists rather than residents that already worked effectively in the US and a few European countries, including France.
I’d just visited France – in fact, Birmingham’s partnership city, Lyon. I knew something, therefore, as both observer and contributor, about the French tourism tax (taxe de séjour), and I considered using it in a Post article to illustrate contrasts between our local government systems.
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I then let you off, for two reasons. First, after the savaging by both ministers and the hotel industry of Sir Michael’s proposal merely for a consultation on a tourist tax, I decided that here it was a political dead duck.
But I also read a Post article by Neil Elkes about the city council exploring the possibility of adapting the business improvement district (BID) concept from geographical areas – like Broad Street, Colmore, Northfield, Sutton Coldfield – to the hotel industry, creating what have become known as tourism business improvement districts or TBIDs.
Instead of businesses agreeing by ballot to pay an additional levy or tax to invest in and generally enhance a defined geographical area, hoteliers would agree in the same way to fund the development of an area’s tourism economy.
Compared to a hotel bed tax, TBIDs sounded more enterprising, in both senses, and, as is being demonstrated, far more likely to happen. If and when they do, they will give an incidental but important boost to the idea of loosening local government’s fiscal straitjacket by working across, without knocking down, council boundaries.
TBIDs, then, represent what could be termed working with the political grain, while what might be about to happen to the French tourism tax – which in the context seems slightly passé – most definitely isn’t.
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Last week, hoping possibly that the country’s attention was focused entirely on Brazil, National Assembly members voted to amend the Government’s draft budget by raising maximum hotel taxes from €1.50 to €8 per person per night, thereby bringing them more into line with other European tourist cities.
At the time of writing, the amendment has still to be voted on in the Senate, but whatever the outcome, this setting by the national parliament of what seems the most local of taxes gives an interesting insight into the duality of French central-local government relations.
We think of France, rightly, as one of the highest taxing EU countries, with taxes contributing around 45 per cent of GDP, compared to our 36 per cent. The even greater difference, though, is that local taxes provide nearly 13 per cent of French total tax revenues, while our single council tax contributes well under five per cent of ours.
As visitors to France will sense, and second-home owners will know, its 36,680 ultra-local communes and other sub-central bodies have access to numerous local taxes – including property ownership taxes, residence tax, local business tax, a refuse collection charge and the tourism tax, which varies according to the class of hotel and the commune setting it.
True, as the tourism tax furore shows, these local taxes are local only up to a point. They are established, structured, capped, and mostly collected by central government and are in effect levied by the state for local authorities.
But it is local authorities who set the rates and spend the proceeds, which, when added to the range of taxes at their disposal, gives even small French communes a financial discretion that our much larger councils can only envy – and endeavour desperately to extend through devices like TBIDs.
I should mention here that an additional reason for this French excursion was Sir Albert Bore’s suggestion (Post, June 19) that the review group set up to advise the city council on devolving powers and responsibilities down to more genuinely local levels might usefully look at, among other models, the arrondissements or districts into which big French cities are divided.
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In fact, there are only three such cities – Paris (city population 2.3 million), Lyon (480,000) and Marseille (850,000): previously single communes that in 1982 were sub-divided into respectively 20, 9 and 16 municipal arrondissements.
Except in Marseille, the arrondissements themselves weren’t new, and most visitors to Paris will recall their clockwise spiral, from the 1st in the city’s centre (Louvre), through the 4th (Notre-Dame), before crossing the Seine to the 5th (Left Bank), 7th (National Assembly), back to the 8th (Champs-Élysées, Eiffel Tower), and so on.
Swap the Seine for the Rea, think Colmore, Centenary Square, Jewellery Quarter, St Chad, Aston Triangle, Eastside, Digbeth, Southside, and you’ll get the idea.
The 1982 change for the arrondissements was that they all now have their own mayors, elected councils and councillors (354 in Paris,148 in Lyon), and limited budgets devolved from their city councils.
Their responsibilities are limited too – managing community facilities, allocating social housing, registering births, marriages and deaths; more limited than what Sir Albert envisages, but worth examining.
As important as devolution downwards, though, is devolution upwards, and again the French may have something of interest: urban communities (communautés urbaines). The first four of these indirectly elected bodies, including Grand Lyon (58 communes, pop: 1.25 million) – were created in 1966 and there are now 16.
They have wide-ranging powers – social, cultural and economic development, urban planning, public transportation, management of social housing and public services – and at least resemble the city regions and suchlike that all our political leaders say they’ll devolve central government powers to after next year’s election. So, anyone for Grand Birmingham?
* Chris Game is from the Institute of Local Government Studies at the University of Birmingham