2M STRUGGLE WITH COUNCIL TAX

FIRST PUBLISHED BY THIS IS MONEY

THE COUNCIL TAX SYSTEM WAS UNDER FIRE TODAY AFTER A STUDY FOUND MORE THAN TWO MILLION HOUSEHOLDS STRUGGLING TO KEEP UP WITH THEIR PAYMENTS.

Ruthlessly snatched back in local taxes

The Conservatives said it had turned into "the ultimate stealth tax", while Help the Aged said local taxation based on property values, instead of ability to pay, was inherently unfair. According to a report commissioned by the Joseph Rowntree Foundation, those on low incomes are particularly badly affected in the current system, having to stump up a larger slice of take-home pay than those on higher wages.

The study found nearly three million summonses for non-payment of Council Tax were issued every year, affecting an estimated two million households. Among those struggling, low income is cited as the main reason for non-payment, the charity said.

Dr Michael Orton, author of the report, said: "Despite having a job, the struggle to pay Council Tax is part of the day-to-day difficulty of making ends meet for many people. Low income creates vulnerability to missing payments and repaying arrears."

A key part of the problem is the regressive nature of Council Tax, with a greater share of income taken from those on lower and middle earnings, according to the report. The study said Council Tax accounted for almost 5% of gross income for the bottom fifth of households and 3.7% for households in the second to bottom fifth. But for those at the other end of the pay scale - the UK's top fifth earners - Council Tax accounted for just 1.7% of income.

Dr Orton said: "Many low income households receive benefits. However, the report found that interviewees' experience of Council Tax benefit focused not on take-up, which in itself is poor, but at the low level of income at which people cease to be entitled, as well as administrative problems and the sheer complexity of the system." Greater consideration needs to be given to make the tax fairer by revising the proportion of tax levied on each valuation band, the report concluded.

Shadow local government secretary Caroline Spelman said: "The Government's abuse of the Council Tax system has turned it into the ultimate stealth tax. "A third of the basic state pension increase since 1997 is now ruthlessly snatched back in local taxes. "Labour's increased use of means tested benefits and complex application forms has resulted in a reduced take-up of Council Tax benefit, so more people on lower incomes are paying higher Council Taxes. "Hard-working families and pensioners are suffering from ever-increasing bills across the board - gas, electricity and water.

"But with Council Tax having shot up 84% under Labour, it is meeting this monthly Anna Pearson, spokeswoman for Help the Aged, said: "Around two million pensioners in this country are affected by poverty and, for many, life is a matter of getting by from week to week.

"Millions of older people face rising bills which overwhelm the meagre increases in the basic state pension. For many, this results in a life of deprivation and cutting back on essential items.

"The complex Council Tax benefit system merely serves to act as a barrier, being virtually impossible for anyone to understand. It is high time the Government realised that local taxation based on property values, instead of ability to pay, is inherently unfair."

A spokesman for the Department for Communities and Local Government said: "Government has made substantial investments in local government that allows authorities to provide high standards of service while keeping down Council Tax increases. "Funding to local government has increased by 33% in real terms since 1997. Total support from Government grant and business rates in 05/06 amounted to more than £60 billion - £3.5 billion, or 6.3%, more than in 04/05.

"Ministers have used capping powers to protect Council Taxpayers from excessive increases and will not hesitate to use them again. "It's also important to recognise that 14% of all Council Tax is met through Council Tax benefit."

READ WHAT: ERIC PICKLES ‘SECRETARY OF STATE’ SAYS ABOUT OVER-CHARGED COUNCIL TAX.

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