Tax Cuts

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If local services were to be funded solely by council tax, richer areas would end up with better public services, whereas the need for good public services is higher in areas with higher levels of poverty.

Most local spending goes to social care, including older people. So if a person happens to live in an area with a high percentage of elderly people, should they pay more in council tax? Or should the cost of social care be spread across the whole population of the country? At the moment, the cost is split. Formula funding from central government pays for most, with contributions from council tax.

What about areas with high levels of social deprivation? Costs, including free school meals and social services, would inevitably be higher without the formula funding. At the same time it's likely that there are fewer high value properties in such areas, so opportunities for raising more council tax are limited. That's why formula funding supports such areas.

How about areas with high numbers of students? Students are exempt from paying council tax, but do use a few local services such as refuge collection and walking on pavements. Such areas are recognised in the formula funding. It would be unrealistic to ask students to pay council tax. Most of them don't have much money anyway and are paying through the nose on rents. If landlords were to be charged council tax, they would inevitably increase the rents, so students would be even poorer than they already are - or their parents would have to pay higher subsidies. Higher education would become a privilege which only the very rich could afford.

growstuff

Freya5

yaiyai

I certainly do think council tax needs reform. Where I live we have a situation where modest detached houses built circa 1970 have , in many,cases, more than tripled in size due to extending sidewards and backwards using up most of garden. Living in these houses are as many as six adults plus children. Is this fair? Not contributing to council coffers. No wonder councils are struggling.

That was tried, via the poll tax. I agree every person able to make use of public services, including fire, police etc should be contributing to those services. Not just the home owner, with other adults still living at home.

They do contribute to services. About 70-75& of local spending comes from central government funding, which raises money from all sorts of taxes, including income tax.

Yes and that is being cut, local people should contribute to local services. We all pay income tax, and all should pay some form of council tax. .

yaiyai

I certainly do think council tax needs reform. Where I live we have a situation where modest detached houses built circa 1970 have , in many,cases, more than tripled in size due to extending sidewards and backwards using up most of garden. Living in these houses are as many as six adults plus children. Is this fair? Not contributing to council coffers. No wonder councils are struggling.

Councils are struggling because grants from central government, which accounts for most of local government income, has been cut.

Freya5

yaiyai

I certainly do think council tax needs reform. Where I live we have a situation where modest detached houses built circa 1970 have , in many,cases, more than tripled in size due to extending sidewards and backwards using up most of garden. Living in these houses are as many as six adults plus children. Is this fair? Not contributing to council coffers. No wonder councils are struggling.

That was tried, via the poll tax. I agree every person able to make use of public services, including fire, police etc should be contributing to those services. Not just the home owner, with other adults still living at home.

They do contribute to services. About 70-75& of local spending comes from central government funding, which raises money from all sorts of taxes, including income tax.

rosie1959

yaiyai

I certainly do think council tax needs reform. Where I live we have a situation where modest detached houses built circa 1970 have , in many,cases, more than tripled in size due to extending sidewards and backwards using up most of garden. Living in these houses are as many as six adults plus children. Is this fair? Not contributing to council coffers. No wonder councils are struggling.

They tried that once remember the Poll tax that went down well

I really cannot understand why those that use the public services that CT provides, are averse to paying for them.

Anybody who really understands local government finances deserves a medal. Most local spending is actually financed by a Formula Grant and some other specific grants from central government. The formula is very complicated and there is evidence that it has moved away from funding councils with greater need and fewer people paying high rates of council tax eg. councils with a high percentage of students or people in low value properties. Additionally, some of those areas have higher needs than average.

After councils have totalled the amount they will receive in various grants (some ring-fenced for specific purposes) they then raise extra income from council tax. Trends over the last decade mean that poorer councils have to raise more money from council tax than previously. The average needed from council tax for all councils is about 25%, but some councils have substantially higher needs, while others are able to raise more by other means eg. parking charges. That's why council tax in councils such as Westminster is lower than in some very poor areas.

Although most people think that their council tax is used to fund their local services, in fact central government has significant control over the amount local councils receive and how it is spent. Council tax is supposed to be a form of wealth tax, but it's actually regressive for people at the top end of the wealth distribution curve. IMO reform of local government spending should concentrate on investigating how central government grants are distributed plus adding one or more bands at the top.

ronib

Another point to consider is that a lot of jobs do not pay a fair living wage. Not much has been said about this.

I think that is where employers should be paying decent wages, and not rely on the Gov to top them up as happens now.

yaiyai

I certainly do think council tax needs reform. Where I live we have a situation where modest detached houses built circa 1970 have , in many,cases, more than tripled in size due to extending sidewards and backwards using up most of garden. Living in these houses are as many as six adults plus children. Is this fair? Not contributing to council coffers. No wonder councils are struggling.

That was tried, via the poll tax. I agree every person able to make use of public services, including fire, police etc should be contributing to those services. Not just the home owner, with other adults still living at home.

MaizieD

Germanshepherdsmum

What do you mean by ‘reforming council tax’ winterwhite?

One 'reform' could be revaluing properties. Council tax is based on extremely out of date property valuations.

I imagine that that would be a political hot potato, possibly equivalent to the poll tax objections and will be left alone.

When I looked at challenging my council tax, mid terraced, B, when opposite me is a 4 bed detached, A. You can check your nearest properties, and how much they are paying, my brother put me off doing it because of the red tape involved. I really don't know what they were doing at the time.

PS. I believe Wales does have an extra band.

Grantanow

It's pretty obvious that 'reforming Council Tax' is code for an upwards revaluation of the tax bands to make local people pay more.

Not necessarily, although some kind of revaluation is long overdue (but would be expensive). Another couple of bands could be added for very high value properties, which wouldn't affect the majority of people. Council Tax is difficult to avoid or evade and therefore has one of the highest collection rates of any tax.

It's pretty obvious that 'reforming Council Tax' is code for an upwards revaluation of the tax bands to make local people pay more.

Absolutely Grantonow. Central government is very happy to see us all distracted, as in the magician's sleight of hand, by diversity/ waste/ woke discussion, not referencing the elephant in the room of the cost of caring for an ageing population.

'Reforming Council Tax' is code for upwards revaluations of properties subject to the tax. In other words Council Tax has to rise in order to fund local authority expenditures which are about 70% statutory costs of adult and child social care and which will inevitably rise due to the ageing adult population. That's the only way central government can avoid making larger grants to councils which would mean higher central taxation. Moans about council 'waste', diversity training, etc., come nowhere near the magnitude of the budget shortfalls facing councils of all political shades.

Cossy

growstuff

PPS. I pay income tax on my pensions. If the income tax threshold were increased, I would pay less income tax, so presumably my housing benefit would decrease.

Surely it would be very similar ?

To be honest Cossy I don't know because I haven't received notification of my Housing Benefit or official notifications of any of my pension increases.

Housing Benefit is worked out on net income, so any increases (whether from increasing the tax threshold or the pensions themselves) reduces benefits. Last year, for example, I didn't receive the "headline increase" (can't remember what it was) because Housing Benefit was reduced. The total percentage increase was lower that politicians were shouting about, which included the freezing of the income tax threshold (I pay tax) and the way Housing Benefit is calculated. As a result, I didn't receive anything like the alleged cost of living increase. I didn't expect an actual increase.

growstuff

PPS. I pay income tax on my pensions. If the income tax threshold were increased, I would pay less income tax, so presumably my housing benefit would decrease.

Surely it would be very similar ?

Cossy

growstuff

I don't know Maizie. People in rented accommodation will see a temporary boost in Housing Benefit (already declared) because the Local Housing Benefit is to be readjusted, but I wouldn't mind betting that will be an excuse for landlords to increase rents.

Private renters receiving HB already have to pay quite high top ups.

I know. I am a private renter and receive Housing Benefit. I know the Local Housing Allowance (eligible amount) will be increased, but still don't know whether increases in the state pensions and my occupational pensions - actually, I know they will but don't know yet by how much, so it's difficult to budget for the months ahead.

Cossy

Susie42

I would like to see the Personal Allowance increased at least for pensioners and the low paid. It appears that the state pension for my husband and I will be more than the personal allowance so we will be paying more tax on our occupational pensions in the next tax year.

Same here, once I am eligible for my state pension in December this year, when I turn 66, I then will have to pay tax.

The personal allowance freeze should be removed and increased! It benefits low earners.

Probably only 20p in the £

Good post Jess20

Must admit I can’t remember rates being set on improvements to property. Rates pay for public services which we use so if I improve my house why should I pay any more I won’t be using anymore services ?

Rosie1959 I know about the poll tax but it doesn’t mean council tax can’t be adjusted due to extending. The old ‘rates’ back in the days before double glazing and c/h were the norm, went up if you improved your property by such as indoor bathroom etc. in my opinion the poll tax was fairest. Non working adults didn’t pay.

too many local authorities are struggling so I would not be happy with cuts in services.

I would prefer a simplified system where it's less easy to dodge paying your share as a very high earner just because you have a good accountant or use things like non-dom status. I'd like to be able to fill in the forms without needing help, far too complex. I'd like to see NHS and social care ring-fenced, taper relief brought back for long term landlords to encourage them to help solve the crisis we have in housing availability. I dislike stealth taxes and Vat on essential items. I don't mind paying tax, even paying more tax, but I want clarity about what it's going to pay for. I think a step back from constantly cutting services would be useful, legal aid needs funding, for example. I'd have a serious look at whether people would be better served by renationalised water, power and public transport on the basis that if a private company can pay dividends to their shareholders and make profits so could we as a nation benefit from that profit with lower costs which might give people more money left after nondiscretionary spending. I would also ensure the civil service had the funds and staffing to do their jobs properly, currently the regulators are either underfunded and toothless (hence sewage problem) or trying to screw us over for minor transgressions over parking, CAZ violations etc without providing good signage, busses and alternatives. Ramble over, I'm sure there's a good reason I'm not in politics.