COUNCIL TAX DISCOUNT MAY BE SCRAPPED

First Published by: Wigan Today

UP to 50,000 Wiganers would be financially worse-off

Plans to scrap a Council Tax discount to single people are introduced. Wigan is said to be one of a number of Labour authorities who want to abolish the Single Person’s Discount to raise extra revenue to offset the effect of Government cuts. Almost 50,000 people who live alone across the borough are currently entitled to claim the 25 per cent allowance which works out at an average of £325 for a Band D property.

Opposition Tory Coun James Grundy says that a family were warned by the council’s own registrar staff that the allowance could go as they recorded the death of a parent in the town hall. Nationally more than 7.7 million people receive the relief and local authorities including Liverpool, Sheffield, Nottingham, Burnley and South Tyneside have already suggested changes to end or reduce the Single Person’s Allowance.

Wigan has 34 per cent of households currently eligible for the Allowance which is, say the council, “around the national average.” But Leader of the Council Lord Smith said; “There is a new bill going through Parliament at the moment which passes responsibility to councils to fund Council Tax but will only provide 90 per cent of the cash. “Any change will be the act of the Coalition Government.”

Council Head of Citizens’ Support Anthony Mohammed said that the Government were in the process of reforming the Council Tax system and from next April local authorities will be responsible for designing their own local Council Tax benefit schemes for Council Tax payers on low incomes. He said: “While the government has indicated that it will be changing the rules for some Council Tax discounts, they have not indicated that they intend to change the rules for qualifying for a single person discount.” But Councillor Grundy insisted that he had been contacted by a worried constituent who learned about the alleged changes threat to the allowance from a council officer as she officially registered the death of her father, leaving the widow as another single person household.

He attempted unsuccessfully to raise the matter at the latest full council meeting. More than 40 per cent of the 10,000 people in his Lowton East constituency currently qualify for the allowance, he pointed out. Councillor Grundy said: “My constituent was warned that the council are thinking of getting rid of the Single Person’s Discount, which she is rightly very alarmed about. “At first I though this must be some misunderstanding or misinformation because I hadn’t heard much of a whisper about it. 

“But now I find that a number of Labour councils, because they want to raise additional revenue, have written to the Communities Secretary Eric Pickles earlier this year asking to do precisely that, or certainly reduce it. “With the number of widows this would effect across Wigan, abolishing the Single Person’s Allowance would be inflicting the real Granny tax. “If this was to go through I would consider it nothing less than a tax on widows and utterly disgraceful.”

However: Councils missing out on millions due to Council Tax discounts

First Published by: Gloucestershire

TAX breaks on empty properties and second homes cost Gloucestershire councils more than £6 million last year. The estimated bill for providing exemptions and discounts came to £6,306,000. Some local authorities give second homes a Council Tax discount, while owners of empty properties may also not be liable for the full amount.

There are exemptions for homes which are vacant for up to six months, undergoing major repair work or have been repossessed. A property empty for longer than six months may continue to qualify for a discount of up to 50 per cent. According to figures published by the Department for Communities and Local Government, the cost to Cheltenham for providing these discounts and exemptions is £1,433,000. In the Cotswolds, it is £1,159,000 while Tewkesbury's figure stands at £446,000.

The three other districts lost out on more than £3 million between them due to the discounts. The Government published proposals at the end of last year which could see Council Tax imposed on empty homes aimed at ending the 'scandal' of abandoned properties. Cheltenham Borough Council gives a 10 per cent discount for empty homes, but does not give any money off for long-term empty properties. Revenues manager Jayne Gilpin said: "Cheltenham Borough Council exercised it's discretion to set the minimum level of discount when legislation was introduced in April 2004.”The decision was made in support of the council's strategy to reduce the number of empty homes in the town."

Tewkesbury Borough Council director of resources George Hill said: "Currently, Tewkesbury Borough Council charges a 100 per cent Council Tax on empty and substantially unfurnished properties where their statutory exemptions have expired. "Where a second home is substantially unfurnished, we award a 10 per cent discount." Ministers say the power to increase the levy – possibly by as much as an extra 50 per cent – on long-term vacant properties would be another 'weapon' in a local authority's armoury in the battle to make better use of housing, while giving a 'nudge' for owners of abandoned homes to bring them back into use.

But the Government insisted the so-called Empty Homes Premium would be discretionary with "essential safeguards and exemptions" to ensure vulnerable people, such as the elderly in long-term residential care, were not penalised by the move. In Cheltenham 403 out of 1,726 (23 per cent) stood empty for more than half a year, in Cotswolds 430 out of 1,139 (38 per cent), and in Tewkesbury 321 out of 822 (39 per cent). Cotswold District Council was unavailable for comment at the time of going to press.

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COUNCIL’S TAX BILLS TO BE FROZEN NEXT YEAR

First Published By: The Sun

HARD-UP families will save an average of £72 because hundreds of local authorities will freeze Council Tax next year.

The average bill for a Band D home will be £1,444 an increase of just 0.3 per cent. But ministers stressed this was well below inflation, which is currently 3.4 per cent. 

Figures show nine out of ten councils will freeze Council Tax bills next year and a total of 26 authorities will actually CUT them. But dozens of authorities including some Tory-controlled town halls have pushed through hikes. 

And only HALF of unelected police authorities have frozen their bills. Local government secretary Eric Pickles declared: “This Government has frozen Council Tax, scrapped Labour’s Council Tax revaluation and given residents new rights to veto excessive Council Tax rises in the future.” Councils which freeze their budgets get a grant from the Government worth around 2.5 per cent of their total budget. 

FAMILIES will be £511 a year worse off under changes to tax and benefits that come in tomorrow, Labour claimed yesterday. Shadow chancellor Ed Balls described George Osborne’s reforms as a “bombshell”. But Treasury chiefs defended the measures insisting millions of families will be up to £330 a year BETTER OFF because of them.

The war of words erupted over figures from the respected Institute for Fiscal Studies, which revealed that hundreds of thousands of families will be hit. Labour said they show the average family will lose £511. About 850,000 will suffer from a cut in the income threshold for child tax credit from £40,000 to £26,000.

Another 212,000 could lose up to £3,870 under changes to working tax credits. Couples will have to work 24 hours a week not 16 to qualify. Mr Balls said: “Families on middle and low incomes are facing a tax credit bombshell. These independent figures show that while the Government may be giving with one hand they are taking much more with the other.” 

But Treasury minister Chloe Smith dismissed Labour’s claims. She said: “From the start of the tax year on Friday 24million households will be £6.50 a week better off. “We’re taking millions out of tax altogether by raising the personal allowance, putting up to £126 back in pockets.”

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HOUSEHOLDS FACE COUNCIL TAX HIKES OF 3.5%

First published by: This is Money

A cynical move by councils to raise tax by 3.49 per cent

This means that many families will need to find £50 extra to pay their bill as the move will not trigger a local vote on proposals. Dozens of town halls are planning a ‘cynical’ rise in their Council Tax bills this year in defiance of the Government. Many of the planned rises are being pitched at levels just below a new trigger for a local referendum. Under rules brought in at the end of last year, any authority trying to push through a hike of more than 3.5 per cent must have it approved by voters. 

Most households will have to find an extra £40 to £50 on top of the average £1,200 a year bill in England. Communities Secretary Eric Pickles said: ‘We are seeing a number of councils acting as referendum dodgers who quite cynically are raising Council Tax by 3.49 per cent in a naked move to dodge the public vote. ‘These councils are treating the electorate with contempt. They should have the courage to put their hikes to the vote and justify the tax rises. Instead they are running for cover.  ‘Councillors have a moral duty to sign up to keep down the cost of living. Anything less is a kick in the teeth to hard-working, decent taxpayers.’ 

Last year virtually every authority observed a freeze in Council Tax demanded by the Coalition government as it started its austerity drive. They have been asked to do the same again next year, and have once again been offered extra Treasury funds, this time of £650million. Several councils look set to return to the same practices that saw the average Council Tax bill almost double in the preceding decade. 

Among those planning 3.5 per cent increases are Green-led Brighton and Hove and Labour councils in Chesterfield, Darlington, Leicester, Middlesbrough, Preston, Redcar & Cleveland and Stockton-on-Tees. Stoke-on-Trent is proposing a 3.49 per cent rise. A number of Tory-led authorities are also planning increases close to the referendum threshold.

Surrey is aiming for 2.99 per cent while Cambridgeshire county council and the district councils of East Cambridgeshire and Peterborough are looking for 2.95 per cent. So far 18 councils have said they want increases up to the referendum threshold. Some 181 have so far signed up to Mr Pickles’s pledge of a Council Tax freeze. The remaining councils – half of the national total – are yet to declare. 

Councils must set their bills by the middle of next month in time to land on doormats at the beginning of April. Many are struggling following the Council Tax freeze last year and insist the £650million on offer is too little. But Emma Boon of the TaxPayers’ Alliance said: ‘It is astonishing that some local authorities have the cheek not only to hike Council Tax, but to do it just below the threshold at which they will need to hold a referendum. 

‘With the Government  offering financial help to councils to freeze the rates this  year there is no excuse for these town hall tyrants to put extra pressure on already struggling households.’ However, Sir Merrick Cockell, chairman of the Local Government Association, the umbrella body for councils, said: ‘Times are tough and councils across the country want to help families by keeping Council Tax down. ‘All local authorities froze Council Tax in this financial year and the vast majority plan to freeze it again next year. ‘The extra government support will help them do that, but this is a one-off grant that won’t be there in 2013 or beyond.’

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COUNCIL TAX WILL RISE THIS YEAR IN MANY AREAS DESPITE DEMAND FROM CAMERON TO FREEZE RATES

First published by: The Mail Online

Battleground: The PM has put £1billion into a fund to help Councils freeze taxes - but many are ignoring his plea

Squeezed households across Britain will have to endure soaring Council Tax bills this year - despite David Cameron's pledge to freeze rates. The Prime Minister has offered around £1billion in grants to help councils fund a freeze, but 15 local authorities - including Nottingham, Middlesbrough and Leicester - plan to increase taxes anyway. The councils intending to ignore the Coalition's demand have said they would face a shortfall if they freeze taxes, despite the Government's contribution. They say they would have to cut services including libraries and rubbish collections because of a lack of cash from central government. 

Councils will decide on next year's tax levels at budget meetings in February and March. They are free to impose up to 3.5 per cent rises, although any that want bills to go up by more than 3.5 per cent must put it to voters in a referendum. A furious Eric Pickles warned that voters would punish local authorities at the ballot box if they attempt to increase taxes before 2013. He said: 'Freezing Council Tax is practical help every councillor can offer their constituents. 'Councillors have a moral duty to sign up to keep down the cost of living. Anything less is a kick in the teeth to hard-working, decent taxpayers.' 

For the second year in a row, the Coalition is offering grants equivalent to a 2.5 per cent increase in taxes. But it has not promised to provide any future funding to ease the pain in the years ahead, as it did previously. Rebellious: Local authorities in 15 areas including Nottingham, pictured, said they could not afford to keep taxes frozen because of central government cuts Ten of the rebel councils are Labour-controlled, and five of those - Redcar and Cleveland, Stockton-on-Tees, Middlesbrough, Darlington, and Leicester city - are planning 3.5 per cent rises.

Nottingham is planning a 3.49 per cent rise.

With communities facing tough times with wage freezes and spiralling household bills, Mr Pickles added: 'A vote against the Council Tax freeze is a vote for punishing tax-rises and Labour's opposition to the policy shows their contempt for hard-working households. 'Local taxpayers will remember that decision next time they cast their vote at the ballot box.' Just last month, figures released by Mr Pickles's department revealed local authorities have salted away a staggering £10.8 billion in reserves – equal to almost half the entire annual revenue from Council Tax. 

Defied: Furious Eric Pickles said councils had a 'moral duty' to freeze taxes Whitehall figures show that 142 councils in England have so far agreed to the freeze, but others say they cannot afford it. Green Party-led Brighton & Hove looks set to ignore the freeze and four Tory-controlled councils are also considering rebelling - Chelmsford, Surrey, Peterborough and East Cambridgeshire. Surrey County Council leader David Hodge claimed the freeze would cost the authority £14million this year. 

He told the BBC: 'The difficulty with a one-off Council Tax freeze is that next year you have to find how do you actually take that shortfall, the £14million, every year for ever.' But he admitted it was 'probably right for some councils' to agree to the Government's deal. Sir Merrick Cockell, Chairman of the Local Government Association, said: 'Times are tough, and that is why many councils are keen to help families with a Council Tax freeze, as they did last year. Indeed, the vast majority of councils appear to be freezing Council Tax for next year. 

'The extra government support for the next financial year will help us do that, but it is really important that everyone understands this is a one off grant. Next year it won't be there. 'This means that councils, already facing bigger cuts than any other part of the public sector and delivering vital services to the most vulnerable members of our society, will have to budget for that shortfall. This can only be done on a council-by-council basis. 

'It is only right that councils take a longer-term view on budget planning and that decisions on the level of Council Tax are made by councillors who will then rightly be held to account through the ballot box, which government recognises. 'Local authorities provide vital services that people rely on and in order to carry on doing this effectively councils need to consider the long-term interests of their residents before deciding if they will take the Government's offer up.' 

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

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STRUGGLING TO PAY COUNCIL TAX

First Published BY: JOSEPH ROWNTREE HOUSING TRUST

A new perspective on the debate about local taxation.

This study discovers who is struggling to pay Council Tax, and provides first-hand evidence of their views and experiences. How many low income households there are in each Council Tax valuation band; how many households are struggling to pay Council Tax; whether people in all Council Tax valuation bands are struggling to pay; interviewees’ own views of Council Tax benefits, issues and solutions.

The researcher suggests the key policy implications are: 

The need to address the position of the far greater numbers of low-income households in low-value properties who currently ‘lose’ in relative terms; Council Tax benefit needs to move beyond take-up to give greater consideration to the negative impact of Council Tax on ‘making work pay’.

Council Tax is the subject of an on-going review. Using statistical analyses and interviews with people who had received a summons for non-payment of Council Tax, Michael Orton from Warwick University explored how many households are struggling to pay Council Tax, and why. The study looked at whether households in all Council Tax valuation bands are struggling to pay, and how many low-income households there are in each Council Tax valuation band. It also examined how people who are struggling to pay experience Council Tax benefit, and what they see as key issues. 

The principal findings were as follows:

It is estimated that more than two million households struggle to pay Council Tax each year in England; these households predominantly have low incomes and are in low-value properties, not high-value ones. In Britain, there are an estimated 181,000 low-income households in bands F-H, but 5.7 million low-income households in bands A-C. Interviewees cited low income as the main reason as to why they had received a summons for non-payment of Council Tax. The largest group of interviewees were in employment, but on low wages.

Interviewees’ experience of Council Tax benefit focused not on take-up, but on the ‘meanness’ of the scheme, administrative problems and the sheer complexity of Council Tax benefit and its interaction with other benefits (including tax credits).

The researcher concludes that the key policy implications are as follows:

Concern with low-income households in high-value properties ought not to lead to a failure to address the position of the far greater numbers of low-income households in low-value properties who currently ‘lose’ in relative terms. This is because Council Tax is regressive (accounting for a larger proportion of household income for those on low and middle incomes than those on high incomes); discussion of Council Tax benefit needs to move beyond take-up to give greater consideration to the negative impact of Council Tax on ‘making work pay’.

Background

Council Tax has been the British system of local taxation since 1993. Council Tax involves properties being valued and then placed in one of eight valuation bands, A to H (H being the highest band). A different amount of tax is payable for each band, with the liability for a band H property being three times that of a band A property. People on low incomes can apply for Council Tax benefit, a means-tested benefit which reduces the amount of Council Tax that has to be paid. In 2005-06, the average annual Council Tax bill in England was £1,009.

Council Tax is the subject of an on-going review, and within the current debate four points were of particular relevance to this study: Council Tax is regressive, meaning that it accounts for a larger proportion of household income for those on low and middle incomes than for those on high incomes. Local tax in the UK accounts for 4.9 per cent of gross income for households in the bottom income quintile, 3.7 per cent for households in the second bottom quintile, falling to 1.7 per cent for the top quintile.

There has been no attempt as yet to identify how many, and which, households are struggling to pay Council Tax. There is considerable concern regarding the position of people, particularly pensioners, with low incomes in high-value properties. There is an emphasis on improving the take-up of Council Tax benefit in order to make Council Tax fairer.

To examine these issues and explore how many people are struggling to pay Council Tax, and why, the study used statistical analyses and interviews with 51 people who had received a magistrates’ court summons for non-payment of Council Tax.

Struggling to pay: how many, and which, households?

It is estimated that over two million households struggle to pay Council Tax each year in England. Those struggling to pay are predominantly low-income households in low-value properties, not people in high-value properties. 

These conclusions are based on the following findings: 

It is estimated that close to three million summonses for non-payment of Council Tax are issued in England each year.

Deprivation is a key factor in explaining the number of summonses issued by councils.

One in four households in band A receives a summons; one in seven in band B; but fewer than one in ten in bands E-H (based on a sample of 22 councils).

Low-income households in high-value properties are exceptional; households with low incomes in bands F, G and H combined represent 0.7 per cent of all households in Britain.

It is estimated that 181,450 households in Britain have a low income and live in bands F-H (including 101,008 pensioner households). It is estimated that 5,740,833 households in Britain have a low income and live in bands A-C (including 2,898,888 pensioner households). 

Interviewees cited low income as the main reason as to why they had received a summons for non-payment of Council Tax. The largest group of interviewees were in employment, but on low wages. The struggle to pay Council Tax formed part of the day-to-day difficulty of making ends meet, despite having a job. “The problem is my wages [£170 per week]. I just don’t earn enough.” (Gardener, male, 20s)

Struggling to pay Council Tax could also be part of a broader debt problem brought about by a dramatic fall in income. Examples of summonses being received because of administrative issues and the person’s own actions were found in all Council Tax bands and at all income levels. But low income created vulnerability to missing payments, and meant problems in repaying arrears.

Low income, benefits and pensions

For those in receipt of benefits, the administration of Council Tax benefit was a problem, as was repaying arrears that were accrued when in employment and before being in receipt of benefits. Questions arise as to the efficiency and fairness of collecting very small amounts of Council Tax from people in receipt of benefits, particularly Incapacity Benefit. In one case, the summons costs were higher than the interviewee’s annual Council Tax liability.

An interview with a pensioner with a low income in a high-value property identified problems with a diminishing private pension, and suspicion about equity release schemes. Problems experienced by other interviewees with apparently low incomes in high-value properties were more to do with fluctuating income.

Council Tax benefit

key issues

Interviewees’ experience of Council Tax benefit focused not on take-up, but on the ‘meanness’ of the scheme, administrative problems and the sheer complexity of Council Tax benefit and its interaction with other benefits (including tax credits). The key point that interviewees raised was again low income and, despite some of them being in paid employment, the struggle to make ends meet. The administration of Council Tax at local level, in particular relating to payment methods, was also a significant issue for some interviewees.

Conclusion

The research has provided a new perspective on the debate about local taxation. In particular, it highlights that: Consideration needs to be given to the position of the estimated more than two million predominantly low-income households in low-value properties who struggle to pay Council Tax each year; Attention needs to be given to making Council Tax fairer by revising the ratio between valuation bands; Low-income households in high-value properties are exceptional; there are far greater numbers of low-income households in low-value properties who, because Council Tax is regressive, currently ‘lose’ in relative terms; discussion of Council Tax benefit needs to move beyond take-up – greater consideration needs to be given to the negative impact of Council Tax on making work pay.

About the project

The project was undertaken by Michael Orton at the Institute for Employment Research (IER), University of Warwick. The statistical analyses were undertaken by Duncan Adam, University of Warwick, and Rhys Davies, formerly of IER and now at the Office for National Statistics. Additional support was provided by Paul Jones at IER.

The research included building a statistical model (a multiple regression model). This drew on an annual survey undertaken by the Chartered Institute of Public Finance and Accountancy (CIPFA), published by CIPFA as Revenue Collection Statistics Actuals. Additional data were obtained from a sample of 22 diverse councils. The indicator of deprivation used was the average ward score from the 2000 Indices of Deprivation.

The analysis of Council Tax band and household income used the Family Resources Survey. Income bands were defined as: low income – less than 60 per cent of median income; modest income – between 60 per cent of median income and median; above average – between median and twice median income; high income – more than twice median income. In addition, 51 in-depth interviews were conducted with people who had received a Council Tax summons

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COUNCIL TAX REPORT URGES REFORM

First Published By: BBC

People who live in the most valuable houses in England should pay more Council Tax, a review of local government funding has recommended.

Sir Michael Lyons' report calls for a new top rate Council Tax band, along with a new bottom rate to cut bills for those in the cheapest properties. The savings limit for pensioners should be higher and Council Tax benefit be paid as an automatic rebate, it adds. Sir Michael said: "Council Tax is not 'broken' but is seen as unfair."

Local tourist tax:

In the short term, he says the burden on pensioners should be eased by raising their savings limit from £16,000 to £50,000. Automatic payments of Council Tax benefit would prevent the situation which currently sees around £1.8 billion unclaimed each year, he said - while calling it a rebate rather than benefit would lead to more people claiming it.

In addition, the report says councils should be able to charge householders for how much rubbish they throw away. In the future ministers should consider ear-marking a fixed proportion of income tax to local authorities, Sir Michael said. He said they should also consider giving councils the power to levy a local tourist tax.

Sir Michael added that future governments could consider introducing local income tax or "re-localisation" of the business rate. However, he said these were issues for the longer term and such reforms would need "greater public support and understanding than currently exists".

Public sympathy for the idea of a local income tax may not be sustained once voters realise how much it will cost them, he added.

Profligate councils:

A local Government Minister welcomed the report and said the government would consider its proposals for Council Tax benefit and local supplementary business rates. He added: "Sir Michael has said that there is no magic bullet or simple solution to local government funding. We agree." However, the minister reaffirmed the government's commitment not to revalue Council Tax during this parliament, and said it would not be introducing a tourist tax or giving up its right to cap the spending of local authorities.

Shadow local government secretary Caroline Spelman said the report was a "tax bombshell" for families. She said: "Nice neighbourhoods and the rising value of homes will all mean higher Council Tax bills." Liberal Democrat local government spokesman called the review "disappointing".

He added: "Three years' work has produced timid recommendations that nibble at the edges of the Tory Council Tax, rather than attacking the unfairness at the heart of it." Blair Gibbs from the TaxPayers' Alliance said the review was a "gives the green light to profligate councils to spend and waste even more of our money".

Visit Britain said it opposed the tourist tax proposal.

A spokesman said: "Accumulative taxes on tourism already make Britain the second-highest taxed country in the world for tourism."

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

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