LGA warns of council tax time bomb
MPs have been urged to confront council tax problems.
Speaking at the ODPM Select Committee on Local Government Revenue last night, a Local Government Association (LGA) delegation warned the Government that it was time to tackle the problems.
It warned that under current Government spending plans, an above-inflation council tax rise appears inevitable.
Those on fixed incomes, especially pensioners, would be especially hit hard by any increase.
This year’s average council tax rise in England and Wales was 5.9 per cent, down from the 12.9 per cent in 2003, but still above inflation.
The LGA’s chairman, Sir Jeremy Beecham said: “Neither Government nor local government can afford more annual rounds of large council tax rises.”
“These are inevitable unless there is either a fundamental shift in the balance of funding between central or local government, so increases in the tax are more closely related to increases in expenditure, or the system is propped up with injections of more Treasury cash.”
Current estimates show that up to 1.7 million older people are not claiming the help they should get. Some of them would be eligible for a 100 per cent refund. This means that four out of ten pensioners, are not receiving what they should.
Addressing the low take up, Sir Jeremy suggested that the benefit system should be simplified, saying: “We want a system that limits people’s liability to pay council tax in the first place so they don’t have to apply for a benefit.”
The LGA is calling for a radical shake up of the council tax system. It argues that the current “fixed property tax doesn’t allow for a fair source of funding local services that grows as the economy grows.”
It suggests that councils should raise three quarters of their income locally and only dependent on central government for a quarter- a reverse of the present situation. This, the LGA claim could be achieved either through the reintroduction of local business rates or the use of a local income tax.
“Local government isn’t asking for more money from tax-payers – it is asking for the ability to raise more of its income locally and become less dependent on Government grant,” commented Sir Jeremy.
