20-02-04

Non-collection of Council Tax costs each household £50 a year – Barrett

John Barrett, Liberal Democrat MP for Edinburgh West, today released new figures which showed the average household in Edinburgh pays over £50 a year more because of poor council tax collection rates.

A Report by the Audit Commission last month showed the council tax collection rate for 2002/03 in Edinburgh was 91%.  After writing to the Director of Finance at Edinburgh City Council, Mr Barrett discovered that an expected shortfall in council tax collection is built into the Council budget and council tax bills, adding an extra £52.05 a year to the average Band D property council tax.

However, in answers to parliamentary questions tabled by Mr Barrett, the Paymaster General said latest income tax collection rates for the UK were higher, at over 96%.
       
In a statement, John Barrett said:

"Although the collection rate of council tax in the Capital has increased, almost one in ten people in Edinburgh are still not, for whatever reason, paying what they owe, costing council tax payers an average of £50 more every year.

"The fact collection rates for income tax are higher makes the case for scrapping council tax and replacing it with a local income tax even more compelling.  The difference in collection rates alone would account for an extra £8 million a year for Edinburgh.  From there you would have even more savings by removing the costs associated with collecting council tax and removing the need for council tax benefit.

"Thousands of people in my constituency alone have already backed a local Liberal Democrat petition calling for council tax to be replaced with a fairer system, related to ability to pay.  There is clear public demand for change.  With the upcoming review of local government finance, the Scottish Executive has the perfect chance to provide that change."

ENDS

Notes to Editors

• The Account Commission report can be found at
http://www.audit-scotland.gov.uk/publications/pdf/2004/04pi01ac.pdf

• The answers received to Mr Barrett's parliamentary question is given below

John Barrett: To ask the Chancellor of the Exchequer if he will estimate the percentage collection rate of income tax in (a) the City of Edinburgh local authority area, (b) Scotland and (c) the UK for 2003; and if he will make a statement.

Dawn Primarolo: The Inland Revenue does not hold details of the percentage collection rate of income tax on a local or regional basis.

The following table shows the national percentage rate as at the end October 2002. These are the latest figures available. The Department's accounting year runs to the end of October and the figures are a snapshot of the position at that time. The figures also include arrears of income tax carried forward from earlier years.

Income tax
Total liabilities (£ million)	125,701.3
Receipts (£ million)	120,890.3
Percentage collected	96.17

• The difference between council tax collection in Edinburgh and national income tax collection is 4.7%.   Total council tax takes for Edinburgh in 2002/03 was £179.4 million (source Edinburgh City Council website).  4.7% of this figure is £8.37 million.