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Little Frank

The Council Tax Recession - The Tax man cometh

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Under the radar somewhat so far apart from Surrey's proposed 15% increase which they eventually rowed back from due to the need to have a local referendum.

Public aren't quite ready for this one, but next month's increases are going to be bang up to the max of 5% on average (including the care precept) which is a real increase of 3% or so.

But that's just the start of it. Non-core services such as green waste bins & car parking fees are also being hiked. They will in effect add at least a further 5% to many people's overall council tax bill, in some case more than that. 

But that's just 2016/17. Osborne's squeeze since 2010 will mean most councils will be repeating these increase year on year to the end of the parliament. 

So 20-25% base increases PLUS a further 5%+ p.a. for ancillary charges/fees = c 50% increases over the next 4 years.

Just when sterling devaluation is driving inflation up and real wages down.

It won't be Carney raising rates that will cause the next recession, it will be real council tax rises.

 

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22 minutes ago, Little Frank said:

Under the radar somewhat so far apart from Surrey's proposed 15% increase which they eventually rowed back from due to the need to have a local referendum.

Public aren't quite ready for this one, but next month's increases are going to be bang up to the max of 5% on average (including the care precept) which is a real increase of 3% or so.

But that's just the start of it. Non-core services such as green waste bins & car parking fees are also being hiked. They will in effect add at least a further 5% to many people's overall council tax bill, in some case more than that. 

But that's just 2016/17. Osborne's squeeze since 2010 will mean most councils will be repeating these increase year on year to the end of the parliament. 

So 20-25% base increases PLUS a further 5%+ p.a. for ancillary charges/fees = c 50% increases over the next 4 years.

Just when sterling devaluation is driving inflation up and real wages down.

It won't be Carney raising rates that will cause the next recession, it will be real council tax rises.

 

Not quite sure how you arrive at 50%.

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My council tax bill has arrived complete with 5% increase, £35 green bin charge etc.

And then I look at the pension fund, it has a £226m deficit. £13m or ten percent of council expenditure was paid in last year.

The choice is between reduced services or tax hikes. Where is the option to cap salaries and cancel the final salary scheme?

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We don't even have a green bin. Plenty of councils don't have them (or at least not compulsory). Everything that isn't cardboard/tin goes in the black bin.

Edited by Errol

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Never understood why they can't do a rebanding of council tax like they are doing with business rates. Surely it's ridiculous that the billionaires living ;) at 1 Hyde Park pay the same maximum council tax (or less) as people up north living in bog standard terrace houses? 

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23 minutes ago, fru-gal said:

Never understood why they can't do a rebanding of council tax like they are doing with business rates. Surely it's ridiculous that the billionaires living ;) at 1 Hyde Park pay the same maximum council tax (or less) as people up north living in bog standard terrace houses? 

Council tax is highest in the poorest areas of the country,mostly due to high spending Labour councils.It the biggest reason low paid working people end up in debt and/or poverty.It should be around £400 a year,not £1200.Most of it goes on pensions,sick pay and the bosses.Councils arent ran for the public,or the lower paid staff delivering the services.They are ran for the bosses and the pensions.The waste is incredible.I know,i used to be a councillor.Most departments have three managers on £50k when one on £60k could do the job.Labour pushed council tax up so high even small increases now hit people very hard.Another reason not to work in the UK.

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1 hour ago, Broken biscuit said:

Not quite sure how you arrive at 50%.

Each council sets their own so it's back of envelope. 

Headline will only be 20-25% over 4-5 years, but if you add back in the hit from increased ancillary taxes (councils will be forced to charge for anything which isn't 'core' in coming years) it could well come to c 50% overall. 

In any event 25% when it has been frozen for so long will be a sufficient shock to take home pay for most people.

 

 

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53 minutes ago, buckers said:

Increase in car park fees just leads to a quieter town centre (I do work for several local shops, there is a direct correlation)

If there's a separate charge for a green bin can you opt to drop the green bin and shove everything in the black bin like the good old days? :)

 

Indeed. But it simply shifts the cost somewhere else. Increased fly-tipping, lower profits for local businesses = lower wages, etc etc.

 

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2 hours ago, Little Frank said:

Under the radar somewhat so far apart from Surrey's proposed 15% increase which they eventually rowed back from due to the need to have a local referendum.

Public aren't quite ready for this one, but next month's increases are going to be bang up to the max of 5% on average (including the care precept) which is a real increase of 3% or so.

But that's just the start of it. Non-core services such as green waste bins & car parking fees are also being hiked. They will in effect add at least a further 5% to many people's overall council tax bill, in some case more than that. 

But that's just 2016/17. Osborne's squeeze since 2010 will mean most councils will be repeating these increase year on year to the end of the parliament. 

So 20-25% base increases PLUS a further 5%+ p.a. for ancillary charges/fees = c 50% increases over the next 4 years.

Just when sterling devaluation is driving inflation up and real wages down.

It won't be Carney raising rates that will cause the next recession, it will be real council tax rises.

 

I know Frank, it's scandalous.

£40 for green bins and 250% parking fee increases after jeffing up the main road for a year and about to close the main car park. How to snatch death from the jaws of a town centre renaissance.

 

At least house prices are still rocketing, eh?

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Stagflation... death knell of Keynes...

Quite possibly the loveliest word in the English language. :wub:

And congratulations to Hammond and Carney for recusing themselves from the UK economy.  :D

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Be glad you're not in Scotland - next year's council tax demand just arrived today.

Up to £256 per month from £221 per month last year, a 15.8% increase for a band G house (admittedly after years of freezes).

Combine that with the Scottish Government not raising the 40% tax threshold (like the rest of the UK), it's getting expensive!

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10 hours ago, Errol said:

Totally insane. An economy based on consumer spending and they take all the money people have to pay taxes.

Soon GDP will be 100% based in Public Spending.

What's that economic arrangement called?

I am sure Mr Corbyn will them be the perfect man for the job.

 

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11 hours ago, anteos said:

My council tax bill has arrived complete with 5% increase, £35 green bin charge etc.

And then I look at the pension fund, it has a £226m deficit. £13m or ten percent of council expenditure was paid in last year.

The choice is between reduced services or tax hikes. Where is the option to cap salaries and cancel the final salary scheme?

 

11 hours ago, anteos said:

My council tax bill has arrived complete with 5% increase, £35 green bin charge etc.

And then I look at the pension fund, it has a £226m deficit. £13m or ten percent of council expenditure was paid in last year.

The choice is between reduced services or tax hikes. Where is the option to cap salaries and cancel the final salary scheme?

my council tax bill used to come with a info leaflet showing the breakdown of the spending, they don't do this anymore I think because they don't want us to know how much of council tax is actually for pensions and not services. It is shocking.

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11 hours ago, anteos said:

My council tax bill has arrived complete with 5% increase, £35 green bin charge etc.

And then I look at the pension fund, it has a £226m deficit. £13m or ten percent of council expenditure was paid in last year.

The choice is between reduced services or tax hikes. Where is the option to cap salaries and cancel the final salary scheme?

They already did cancel the final salary scheme.

All new entrants to the lgps (or civil service, teachers and nhs pensions for that matter) now accrue benefits based on a career average. The lump sum entitlement was phased out in 2008 or so. Salaries were subject to a pay freeze between 2010 and 2013 at most councils.

Despite the fat cat headline grabbers most public sector pensions and salaries are not extravagant. According to my local lgps annual report the average pensioner gets paid about 4 grand a year out of it. 

The really story here is conservative sleight of hand; reducing central government taxes like income tax whilst also reducing central government subsidies to local government meaning the burden for raising funding for services (many of which, such as adult social care, are statutory obligations) falls on councils. Giving with one hand taking with the other and forcing councils to be the bad guy and make tough decisions.

Since 2006 ish the minimum earning threshold is about about 5 grand meaning an extra grand off the tax bill for full time workers. A 5% increase in council tax will be about 50 to 75 quid for most people and even that will be woefully inadequate to cover costs.

So yes, services will stop being provided and go to private providers who will jack the price up. Many councils actually froze tax during the recession. I doubt Serco will be as accomodating.

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Trouble is, in most of the UK conurbations with low income the Labour councils have grown into massive bureaucratic things with dozens of people whose job is administration for council tax, with huge pension liabilities which fall onto CT payers regardless. 

I look at the breakdown of the CT bill for Gateshead - my council - and I despair. I'd rather NOT know as there's nothing I can do about it. 

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8 hours ago, The Knimbies who say No said:

At some point older people are going to have to change the habit of a lifetime and pay a fair share for something.

you do realise older people pay council tax too

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13 hours ago, Hullabaloo82 said:

They already did cancel the final salary scheme.

All new entrants to the lgps (or civil service, teachers and nhs pensions for that matter) now accrue benefits based on a career average. The lump sum entitlement was phased out in 2008 or so. Salaries were subject to a pay freeze between 2010 and 2013 at most councils.

Despite the fat cat headline grabbers most public sector pensions and salaries are not extravagant. According to my local lgps annual report the average pensioner gets paid about 4 grand a year out of it. 

The really story here is conservative sleight of hand; reducing central government taxes like income tax whilst also reducing central government subsidies to local government meaning the burden for raising funding for services (many of which, such as adult social care, are statutory obligations) falls on councils. Giving with one hand taking with the other and forcing councils to be the bad guy and make tough decisions.

Since 2006 ish the minimum earning threshold is about about 5 grand meaning an extra grand off the tax bill for full time workers. A 5% increase in council tax will be about 50 to 75 quid for most people and even that will be woefully inadequate to cover costs.

So yes, services will stop being provided and go to private providers who will jack the price up. Many councils actually froze tax during the recession. I doubt Serco will be as accomodating.

+1 good post, thanks.

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My band C flat is already about  1.5k a year, at 5% yearly increases that will double every 14 years. Can anyone explain how in the future people will be able to stump up 3, 4, or 5k a year in council tax and we still have a functioning consumer economy Will there be a mad dash for people, particularly retired to move into band A homes? Perhaps the councils will demand that older people who can't pay will have to sign over their home after death in leiu of paying their bills and social care, this could get get very nasty indeed.

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