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Council Tax : Regressive And It's Effects On The Low Income Sector - Carers UK Forum

Council Tax : Regressive And It's Effects On The Low Income Sector

Discuss news stories and political issues that affect carers.
At last , an article on the concept of Council Tax ... which dovetails into several threads :


https://www.theguardian.com/money/2018/ ... thinktank.


Scrap 'highly regressive' council tax, says thinktank.

Resolution Foundation says levy now resembles much maligned poll tax and should be replaced with more progressive system.


Council tax is an outdated and regressive levy on households that should be scrapped in favour of a progressive levy on property, according to a report by the Resolution Foundation.

The thinktank said council tax had become almost flat-rated in some areas to leave it resembling the much maligned poll tax of the early 1990s.

With bills about to jump by almost 6% from next month in many parts of the UK, the government should consider far-reaching reforms or a replacement of the main tax on property before it became discredited and fuelled public resentment, the report said.

Laura Gardiner, principal researcher at the foundation, said the unpopular community charge, which was more commonly known as the poll tax, was considered a failure and abolished in 1991, “in large part due to the unfairness of a flat rate tax where families generally paid the same amount irrespective of the value of the property they lived in”.


She said analysis showed that council tax has “only a very weak link to property values” that meant it was “highly regressive”.

“Someone living in a property worth £100,000 pays around five times as much council tax relative to property value as someone living in a property worth £1m. This is exactly the kind of result that opponents of the poll tax wanted to avoid and in stark contrast to income tax, which increases with incomes in a progressive way so higher earners pay a higher average tax rate,” she said.

There are eight council tax bands that determine annual charges. All the bands are based on 1991 property prices following the failure of successive governments to sanction revaluations.

The highest band (H) is for homes valued at £320,000 and above, despite the average London houseprice now being more than £480,000. Purbeck district council in Dorset will charge band H homes £3,747 from April while Wandsworth council in London, which hosts some of the most valuable homes in the UK, will charge £1,433.

The foundation said ministers should consider replicating the 2017 reforms implemented in Scotland across England and Wales, which involved increasing council tax rates in the top four bands and generated a little over £1bn.

An alternative reform would be a “mansion tax” surcharge of 1% on the value of properties worth more than £2m and 2% on the value of properties above £3m, which would also generate just over £1bn.

A broader overhaul could involve a switch to a 0.5% charge on all properties that would result in a £100,000 home in Newcastle being charged £500 a year and a similar sized £1m home in London charged £5,000 – a £3,000 increase on current charges.

Earlier this year Labour’s Andrew Gwynne suggested his party could scrap council tax and replace it with a “radical” new system for funding local government.

Without giving details of planned changes, Labour’s shadow communities secretary said: “Council tax is broken. It is not fit for purpose.”

In Labour’s 2017 election manifesto it hinted that council tax could be scrapped in favour of a tax on land that would target some of Britain’s richest families.

Sajid Javid, the communities secretary, has so far shown little appetite for reforming council tax. Critics of the current system say most reforms are blocked by households in expensive properties that live in areas of the country dominated by Conservative MPs.



Anyone NOT agree that Council Tax is both regressive , and highly toxic for those of us on low income ?

I don't have enough pension income coming in to pay Income Tax but ... I still pay the full whack of Council Tax ( Less 25% for being the sole occupier ) ... now 13% of my monthly income ... and that's under Band A !

CT arrears are at record levels ... 2 in 7 'ere in Bassetlaw alone ... in less " Prosperous " areas ?

.... and increases in CT nationwide , part of which to fund social care ?

Factor in the local level of income on each manor and you have a classic case of the lower income areas always needing more funding than the more prosperous areas ... 'ere in Bassetlaw , one could live very well on an income of £ 25,000 per annum ... in other areas , he / she would be considered to be a pauper.

Madness !!!

If CT is to be superseded , that's where the fun really begins ... ???

If based on " Property " , same situation will arise ... property is one thing , income another.

It all points to a " Local Income Tax " of sorts ... and not a local Sales Tax as encountered in the USA.

Don't hold your breathe ... nothing will change unless more LAs declare themselves bankrupt !
There is no direct relationship between the size of someone's house and the income of the person living there. I believe we should just pay income tax, if we qualify, I don't. My Council Tax bill has just popped through the door. £2,000! For a simple but comfortable New Forest cottage.
An article in today's Independent which dovetails , nicely , into this thread :


https://www.independent.co.uk/news/busi ... 67931.html

Council tax burden for poorest households in London six times more than highest earners, new research shows.

On average the poorest 10 per cent of households in London see 8.1 per cent of their income before housing costs swallowed up by council tax.


The council tax burden for the poorest households in London is six times greater than that for the highest earners as a proportion of their income, according to the Institute for Public Policy Research (IPPR).

On average the poorest 10 per cent of households in London see 8.1 per cent of their income before housing costs swallowed up by council tax, the think tank said.

This is around six times the proportion of income for the richest 10 per cent of households, at 1.3 per cent.

The calculations include those entitled to council tax support and receiving it and those who do not receive it.

The IPPR, which describes itself as a "progressive" think-tank, argues that the council tax system takes too little account of ability to pay and is therefore unfair.

The research said that a poor take-up of council tax support is partly responsible for the "excessive burden".

Luke Murphy, IPPR associate director for environment, housing and infrastructure, said: "Council tax is a poor tax. It hits the poorest hardest, it is increasingly not fit for purpose and is in dire need of reform."

Earlier this week, another think tank, the Resolution Foundation, argued that council tax is outdated, regressive, and, despite being notionally based on the value of homes, functions in many ways like its hugely controversial predecessor - the poll tax, which charged households a flat rate.


The Foundation argued that under the council tax system wide bands can cover significantly different property values, meaning that council tax's link to property values is "weak".

In February, it was announced that Parliament approved a funding settlement for English local authorities that would see a real terms increase in available resources over the next two years and give them access to over £200 billion from 2015 to 2020 to deliver the services local communities need.

The threshold at which councils must hold a referendum before raising council tax has been set in line with inflation at 3 per cent.

Secretary of State for Housing, Communities and Local Government Sajid Javid said in February: "Parliament has today approved a settlement that strikes a balance between relieving growing pressure on local government whilst ensuring that hard-pressed taxpayers do not face excessive bills."


Regretably , nothing will happen in the short term ... next 5 / 10 years ... we are burdened with this system which will only get worse as more LAs become virtually insolvent.
Several threads for this one to be shoe horned ... I chose this one given the unjust nature of CT and the loopholes available ... to the better off :


http://www.lowestoftjournal.co.uk/news/ ... -1-5471604


Suffolk campaigners call for an end to the " Scandal " of second home tax avoidance loopholes.


A minority of Suffolk second-home owners are claimed to be “robbing the public purse” by abusing a loophole to avoid tax.

Campaigners warn growing numbers of second-home owners are registering properties as holiday-lets and claiming small business rate relief to dodge tax.

The loophole, which is said to be costing councils millions in lost income, has provoked national outcry and calls for a crackdown.


In Cornwall, which has the UK’s highest concentration of second homes, councillors are trying to take devolved powers to end the practice. Second home ownership is almost as high in parts of East Suffolk, especially coastal communities such as Southwold, Aldeburgh and Walberswick where more than a third of residential properties are registered as second homes.

While most second home owners pay council tax, like any other resident, critics have pointed to government figures showing many in coastal areas of Suffolk are now registered as holiday accommodation.


To qualify as a holiday let there is no requirement to be let out to tourists - only “available to let” for 140 days a year – which could mean as little as a window advert.

And as long as the property’s rateable value is less than £12,000, owners can get 100pc rate relief - meaning they pay no tax on it.

In Southwold, campaigner David Beavan, found 354 small businesses were claiming relief last year, of which 263 were second home holiday lets. All the second home businesses were claimed to have qualified for rate relief, amounting to £551,744.

Separate research by the EADT found 190 of the 387 businesses registered in Aldeburgh’s IP15 post code area were holiday lets.


While many may genuinely be let out, Mr Beavan has criticised the loose criteria required to register a holiday business and the ease of claiming rate relief.

He said he was “trying to expose a scandal” that was costing the council around £500,000 a year.

“We are not against second home owners, many of whom elect to pay council tax,” he added.

“But we think it is unfair that people who can afford two homes are subsidised by people who can’t afford one home. The rate relief is there to help struggling businesses, but the recent rate revaluation has put most small shops above the ceiling.”

Mr Beavan, a Liberal Democrat, has been working with the party’s East Suffolk branch to campaign for change.

Branch vice chairman Jon James said: “Many second home owners do pay council tax, contribute to community life and hold the property as part of their future retirement portfolio and intend to live in the area.

“We do also recognise that the local tourist economy requires a high level of accommodation especially catering for families.

“However we believe that the system is not fair to many small businesses, who are not getting the rate relief or to the community who miss out on the council tax.”

In a letter to Suffolk Coastal MP, Therese Coffey, the branch called for the criteria to be brought in line with “furnished holiday lets”, which must be actually rented for 105 days each year. “We welcome visitors to our local towns and they are vital to our economy, but ask them to pay their fair share,” the letter continued. “East Suffolk Liberal Democrats are pressing for this tax loophole to be closed.”

Dr Coffey said she was aware of the issue had raised it with ministers previously, most recently when with Southwold’s deputy mayor Melanie Tucker. “I look forward to receiving the representation from constituents on this matter,” she added.

Christopher Hudson, who has previously raised concerns about the effect of second homes on Suffolk communities, said the system was a “dog’s breakfast”. “If this is some sort of wheeze to get around paying tax, we should be seeing through it,” he added.

“Local authorities are being taken to the cleaners by people who are effectively robbing the public purse.”

A spokesman for Suffolk Coastal and Waveney district councils said “we have a zero tolerance policy towards fraud” and a corporate fraud team investigated any suspected case. “It is a criminal offence to avoid paying council tax by fraudulently giving false information to the council, or by not telling the council about any changes that might affect how much council tax is due,” he added. “This includes giving false information to claim a discount, exemption or other reduction. Where fraud is proven the council will take action against the person committing fraud.”

People with information can contact the fraud hotline email address or call 01394 444444.

How does the system work ?

Properties available to let at least 140 days a year are classed “self-catering” and valued for business rates.

The Valuation Office Agency determines the rateable value based on the property type, size and location. If a property’s rateable value is less than £12,000 the owner is entitled to 100pc rate relief;

As most holiday homes have a rateable value of less than £12,000 very few owners pay any business rates. And as they are classed as businesses, they pay no council tax either.

The Liberal Democrats want to change the requirement for self-catering businesses to be brought in line with “furnished holiday lets”, which must be available to let for 210 days a year and actually let for 105 of those.

East Suffolk councils have no role in permitting second homes to be reclassified,

They say the owner would need to satisfy the VOA that the property is available to let and this could involve a notice in a window or website advert.


So much for fairness when it comes to paying CT ?

Very much like Income Tax ... the more you earn , the more opportunity to minimise one's tax bill ?

The less collected from " Second home " owners ... how many members in the House fall under that category ? ... the more all reading this posting will pay in CT ???