Thursday, 20 December 2012

Changes coming on the home tax front. My January Sussex Local Article

Pound in your pocket

With all the talk of the UK cutting massive amounts off it’s spending, the fact is that the UK has only made cuts of 1.8% off it’s annual budget, compared to 20% for Greece and a whopping 33% for Ireland.  All the talk about cutting too far and too deep is actually just that, talk.  We as a country are still borrowing over £120 billion a year down from £165 billion in 2010.  We were borrowing as a country £21 million an hour in 2010 and that is now down to £14 million an hour, eye watering amounts, and a tragedy for our children and their children. The extent of the financial calamity that we found ourselves in 2008 is only really dawning on our politicians and financial officials. The cuts that were outlined in 2010 are still coming through the pipeline and the UK economy will continue to be squeezed. 

One of those cuts is now upon us; the coalition government is changing council tax benefit by localising it, from now on a proportion of Council tax benefit will be funded from the local tax payer rather than being funded from central government. Local Councils are not being compensated for this so it’s an extra burden to local tax payers.  We as a Council could charge people receiving Council tax benefit a small proportion, but the cost in collecting and recovering that money will be disproportionate to the monies that we will actually receive from the most vulnerable in society, e.g. the proportion of bad debt would be high.  As a result of this Some Councils are withdrawing all discounts and exemptions which would cover a good proportion of the money needed to fund this.

We at Arun have decided for the next year at least to fund the shortfall ourselves through a combination of additional tax raising on the periphery and the use of reserves. The standard rate should be frozen as last year, but Arun has decided to raise additional tax by increasing Council tax for second homes from the current 90% to 100% and by increasing empty home discount from 0% to 50% for up to 6 months.  In addition homes that are uninhabitable will also pay 50% for 6 months instead of the current 0%.  Also any homes empty over a period of 12 months will have to pay 150%.
Not an easy message to convey, but politics is about making difficult decisions and try to take a balanced view between the haves and have not’s, what we really need is economic growth to offset the fiscal drag from the 2008 financial crisis. The chancellor has signalled another 5 years of austerity, which will make it a decade of fiscal consolidation after a decade of excessive borrowing.

Until next month, Have a very happy and peaceful New Year-  email pauldendle@aol.com

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