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IsItFair for council tax south of the border

Scottish Action Against Council Tax is a non party-political pressure group dedicated to the abolition of the present system of Council Tax.

We believe that the Council Tax is grossly unfair and contend that the whole basis of this regressive tax is flawed. No amount of tinkering with the system, aimed at giving it a veneer of fairness for short-term political gain, can be justified.

Our fundamental principles which we believe, taken together, should be adopted as the criteria on which the fairness of a replacement tax should be judged are:

  1. Council Tax should be scrapped in favour of a fair system.
  2. The replacement tax must not be based on domestic property value, but should be levied on all residents who are able to pay.
  3. The replacement tax must be based on ability to pay (preferably from income) and should contain no regressive elements.
  4. The replacement tax must not disadvantage those whose circumstances are such that they would qualify for Council Tax Benefit under the present system.
  5. The replacement tax should avoid the necessity for means-tested benefits.

Although the SAACT Website is copyright, readers may freely quote from it without requesting permission, provided that due acknowledgement is made to SAACT.

The Case for Replacing Council Tax

  • Council Tax is grossly unfair. It bears no relation to ability to pay.

  • Council Tax is levied on the basis of a purely notional domestic property value (calculated in 1991!) which bears no relation to income or even other disposable assets. But most of us have to pay our Council Tax from our incomes. The paper value of our homes does not pay our Council Tax for us. (In any case, tenants have to pay Council Tax as well as home owners.)

  • People on low incomes (including pensioners, but not only pensioners) can pay 20% or more of their incomes in Council Tax. Some well-off people pay 1% or less of their incomes. How can this be fair?

  • Households with three or more wage earners pay exactly the same as two-adult households (many of which have only one wage earner). How can this be fair?

  • Since it was introduced in 1993, Council Tax has increased very much more than national average earnings and pensions.

  • Council Tax is difficult to collect, and easy to evade. In Glasgow, only 86.0% of the Council Tax due for 2006-7 was collected in the year of billing. It is true that, since then, collection rates have been slowly improving: in the last few years they have been 92.6% (2011-12), 93.1% (2012-13), 93.9% (2013-14), 94.6% (2014-15), 94.7% (2015-16) - but there is still a shortfall of 5.3% in collection. Even including collection of arrears, only 91.6% has been collected for the year 2005-06. (Council Tax Collection Statistics 2015-16, Tables 2 and 3 - Scottish Government.) The improving collection rates might be at least partly due to the fact that many Councils are now encouraging payment by Direct Debit or other direct methods. They may also be due to the Council Tax Freeze, which has been in operation since 2007-08. However, the Scottish Government's report regards it as unlikely that much more outstanding Council Tax debt will be collected for the earlier years. It further notes that previous research has indicated that deprivation is linked to non-payment of Council Tax.

  • Council Tax is also costly to collect. The Burt Committee estimated that the annual cost of collecting Council Tax in Scotland, including Assessors' costs, is currently £42 million. In contrast, the annual costs of collecting a centrally-set income-based tax would be £17-£28 million. The savings produced by a centrally set income-based tax would therefore be £14-25 million. (Burt Report, Figure 10.3, page 107).

  • There are people who would try to evade any form of tax, however fair. But difficulties in Council Tax collection are not usually due to deliberate evasion by those who could well afford to pay. Many people genuinely have difficulty in paying. A study by the Joseph Rowntree Foundation (28th September 2006) estimated that close to three million summonses for non- payment of Council Tax are issued in England each year, and concluded that deprivation is a key factor in explaining these numbers. One in four households in Band A receives a summons; one in seven in Band B; but fewer than one in ten in Bands E-H (based on a sample of 22 Councils).

  • In contrast, under a flat-rate income-based tax, everyone would pay exactly the same percentage of their taxable income. What could be fairer than that?

  • Further, under an income-based system, the tax would be deducted (for most of us) from wages or pensions at source, through PAYE where possible Most of us could not easily evade an income-based tax!

  • It is sometimes argued that Council Tax Reduction (formerly Council Tax Benefit) deals with those who find difficulty in paying Council Tax. But there is overwhelming evidence that means-tested benefits do not work fairly, and cannot be made to work fairly. In a report published on 25th June 2009, the Department for Work and Pensions estimated that, UK-wide, the number of people who were entitled to claim Council Tax Benefit in 2007-2008, but who did not claim it, was between 2.33 million and 3.06 million. Needless to say, an income-based tax would do away with the need for a separate Council Tax Reduction.

  • There is also a high level of Council Tax Reduction fraud.

  • We analyse these issues in more detail in our Newsletters and in our response to the Burt Committee's consultation exercise - see appropriate sections of the Website.



Copyright © 2011 Scottish Action Against Council Tax
Although the SAACT Website is copyright, readers may freely quote from it without requesting permission, provided that due acknowledgement is made to SAACT.