More tax will go uncollected, warns council chief
- Credit: Archant
Town hall bosses are expecting sharp increases in non-payment of council tax following controversial welfare cuts.
Camden Council’s tax collection rates are among the best in the country, but the local authority’s finance chief, Cllr Theo Blackwell, said he expected swathes of low-income households to be unable to pay their bill over the next few years.
The government abolished council tax benefit in April. Instead, residents can apply for a council tax reduction.
In Camden, those who previously did not have to pay any council tax now have to contribute 8.5 per cent towards their bill, although some categories of people, such as pensioners, remain exempt.
Next year the contribution for those who were previously exempt will increase from 8.5 to 17 per cent.
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The changes have coincided with other welfare reforms, including cuts to housing benefit.
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In February, Camden Council said it may have to move 200 low-income families out of the borough because it could no longer afford to support them.
Recent figures show £9.4million in council tax has gone uncollected in Camden over the last 10 years – 0.9 per cent of the total paid in the same period.
But Cllr Blackwell warned that the changes to council tax benefit would lead to increased costs for the council in the long term.
He said: “We have the third-highest rate of collected council tax in the country because we have a very effective system in place.
“If the government cuts our grants, it’s important we keep collection levels up so we can continue spending on services.
“But we expect to have problems in the future.
“It’s going to be harder for us to keep our collection rates up because the government is pushing 16,000 low-income families into the council tax regime, which means more people being unable to afford to pay their council tax bill.”
Cllr Blackwell also predicted that the council would have to spend more money chasing payments.
“The changes to council tax benefits sound good on paper, but it becomes very admin heavy and costly for us in the end,” he added.“We’ve gone closer to imposing a poll tax system.”
In March, the council voted to freeze the level of council tax this year and next.
Money collected in council tax accounts for 10 per cent of the local authority’s spending.
Chris Richards, managing director of Council Tax Advisors, an organisation which helps those who owe money to their local authority, said the changes would lead to bailiffs being used more often.
“The human impact on the changes to council tax benefits are, in my opinion, being felt far wider and more severely than first expected. I would be extremely surprised if Camden’s collection rates didn’t suffer as a result of these changes.
“This can only lead to further use of bailiffs to recover monies that taxpayers will struggle to pay. Couple that with the current vast bailiff fees added to a debtors account – the future, if nothing constructive is done, is very bleak.
“Council Tax Advisors are not only expecting a rise in the number of people seeking our help, we are already seeing it.”