The dreaded Council Tax

Mike_S_8

ManAtHome wrote:

Re-distributing the burden is really just re-arranging the deck chairs...

OK. So what other ideas/solutions can we come up with? Your suggestion in an earlier posting (pay-for-what-you-use) would be fine - but an absolute nightmare to admininster - and open to all sorts of fiddles.

ManAtHome

The pay-as-you-go would only really work for rubbish collection, even then more as an incentive - would still like to see it introduced though, not just purely from a financial view.

Has anyone costed the impact of removing local tax collection - this appears to be around 25% of the total (the "asset wealth tax" bit) - I have no idea of the costs involved though.

How about increasing VAT - this is a largely discretionary tax (main essentials /exceptions being power), and should be less likely to impact taxpayers who are already struggling?

However, whatever anyone comes up with for the short term, we're still going have problems. An increasing proportion of local and national taxes will be swallowed up by ever-increasing government spending (up 14% this year I believe). We now have commitments for government pensions and PFI stretching many years into the future - guess who foots the bill...

margaretclare

lodestoneman wrote:

No Margaret, you haven't got it wrong, in principle at least. But the fact remains that Council Tax Benefit is not available to anyone whose whole life savings amount to no more than the price of a pretty mediocre family car (£16,000). If you can't afford to pay it out of income and your savings are more than this you will have to pay it out of savings until they've reduced yur savings to £16,000. Only THEN can you get CT Benefit.

But it gets worse. Currently under consideration (by Sir Michael Lyons) is what is known as 'deferment'. This will mean that if you own (any part of) your own home but don't have the income to pay Council Tax you will be able to opt instead to allow the council to make a charge against the value of your home when you die. The annually applied charges will of course carry compounded interest, so if for example you retire at 60 and die 25 years later (age 85) it can be shown that by that time the council will legally own 25% of the then value of your home. This is of course in addition to the 40% inheritance tax the Government will take.

However, since most people's estate is largely tied up in the value of their property, and since the average house price is below the threshold for CGT, it follows that most people wont pay much in capital gains. But no such safeguards apply to council tax. So it will not be Government but the council which will get the lion's share of the cake, and all because your income was too small to pay either income tax or council tax.

I really can't think there is anybody in the land who would support that as a fair and just system.

Thanks for this very comprehensive explanation of a convoluted and Machiavellian system. I agree, this cannot be fair. You say that: "Currently under consideration (by Sir Michael Lyons) is what is known as 'deferment'. This will mean that if you own (any part of) your own home but don't have the income to pay Council Tax you will be able to opt instead to allow the council to make a charge against the value of your home when you die."

So this is something people will be invited to 'opt for'. Who in their senses would opt for such a thing? Turkeys opting for Christmas, comes to mind.

Margaret

Mike_S_8

margaretclare wrote:

Who in their senses would opt for such a thing?

Especially if they were already in an equity release scheme!

Mike_S_8

ManAtHome wrote:

The pay-as-you-go would only really work for rubbish collection, even then more as an incentive - would still like to see it introduced though, not just purely from a financial view.

Moves to introduce "Pay-as-you-throw" are silently being put in place. If your local authority has supplied you with new wheelie bins recently, look under the rim to see it it has a microchip in it. (Round things - about the size of a 10p coin.) There is a circular recess in mine, but no chip - Yet. See THIS

margaretclare

lodestoneman wrote:

But the fact remains that Council Tax Benefit is not available to anyone whose whole life savings amount to no more than the price of a pretty mediocre family car (£16,000). If you can't afford to pay it out of income and your savings are more than this you will have to pay it out of savings until they've reduced yur savings to £16,000. Only THEN can you get CT Benefit.

But it gets worse. Currently under consideration (by Sir Michael Lyons) is what is known as 'deferment'. This will mean that if you own (any part of) your own home but don't have the income to pay Council Tax you will be able to opt instead to allow the council to make a charge against the value of your home when you die. The annually applied charges will of course carry compounded interest, so if for example you retire at 60 and die 25 years later (age 85) it can be shown that by that time the council will legally own 25% of the then value of your home. This is of course in addition to the 40% inheritance tax the Government will take.

Just acting as devil's advocate here, you understand, but....if a person has £16,000 in savings, in a half-decent account where it might earn, say, 5%, that will bring in £800 at simple interest, and this £800 will go a long way to paying the council tax. Ours is just short of £1200, so £800 is 2/3rds of the year's council tax.

Additionally, if your property is liable to 40% inheritance i.e. its value is over £285K, then you have the possibility of 'downsizing' to something cheaper which would not only release funds but would mean you'd have less council tax to pay. So people do still have choices.

In future years, people will not be retiring at 60 anyway.

BTW, paying extra for rubbish collection - I already pay £39 a year for a fortnightly 'green collection' of garden waste. I chose to do this when the scheme started here in July 2005. Next door 'don't see why they should pay extra, they already pay council tax' so they put grass mowings, Leylandii clippings etc into the normal wheelie-bin and it all goes into the diminishing amount of landfill.

Margaret

EdInvestor

Are we asking the right question? Let me ask a different one:

Is council tax value for money for the services provided ( regardless of whether you use them or not)?

And a second: Are councils being required to provide too many services?Would people prefer to pay less and get fewer services?

If so, any nominations for what should be dropped?

lodestoneman

margaretclare wrote:

.In future years, people will not be retiring at 60 anyway.

They will if they are Public Servants, which is the root of the problem. Most of what you pay in council tax goes to pay the salaries and pensions of these people (now 1 in 5 of the population), and these people are demanding we pay them much better (earnings related) pensions at a much earlier age (60) than as you rightly say is available to the rest of us.

Hardly what you could call 'justice' is it? Specially when you consider these people living in a feather bedded lap of luxury legally thieved from penniless old ladies who are threatened with jail or bankruptcy if they can't pay.

Come on Britons! Wake up to what is happening to you.

elmer

I am a "public servant living in the feather bed of luxury" who will when I retire in 25 years time (if I am allowed then) will get the grand total of £2350 per year in pension.
I think your idea of feather bed of luxury will have to be downgraded to a pillow if Im lucky. And most of my colleagues at work are in similar positions.

We also are fortunate to work in Counci; Tax, which I agree is a very unfair system, but which we take a serious amount of hassle for on a daily basis, so please, I am not "legally thieving from penniless old ladies", just trying to do a job to the best of our ability, so that hopefully we can help the little old lady, when she needs it and before I turn into one myself.

Elmer

seven-day-weekend

I too have a Local Authority Pension to come in eight years time (at 65) when it will be the princely sum of just over £2,000 a year on todays rates.

I am no longer working so I am not contributing any more to it.

Also I have to pay Council Tax on mu UK house the same as everyone else.

My feather bed couldn't have had any down put in the matress.