Why Council taxes are going up
Given the comments on my previous post I think a brief lesson on why Council taxes have been going up is in order:
Council tax is largely determined by the amount of money which a local authority (eg Monmouthshire County Council) receives from the Assembly. The lower that amount is, the more council taxes have to rise to make up the difference.
There are two reasons why council taxes have risen each year at levels that are way above the rate of inflation.
The first is that the each year the Council faces a rise in their costs, often due to initiatives which are imposed by the Assembly without being properly funded. The Council has faced a rise in costs because of these extra regulations such as the Teachers Workload Agreement. The difference between what the Council gets from the Assembly and what it has to spend is made up by the Council tax.
The second problem is that formula which is used to determine how much money each local authority gets from the Assembly, (and therefore how much extra they will have to levy in Council tax to meet their costs) is shamelessly skewed against more rural areas such as Monmouthshire.
Monmouthshire suffers from the misconception that it is a “leafy area” which, to quote the former leader of Blainau Gwent, “can afford to pay.” This is simply not true, but on top of the poverty that exists here the costs of maintaining services in a rural area are much greater than in neighbouring urban areas. Road maintenance alone will be vastly more expensive, and as the Free Press recently reported Council officials are warning that the roads are turning into cart tracks because of a lack of upkeep.
This County also has a relatively high elderly population many of whom need help from social services. None of this is properly factored into the formula which the Assembly use to decide how much money to give to each of the 22 local authorities so our taxes go up.
On numerous occasions both inside and out of the Assembly I have spoken out about this issue and highlighted the way in which Monmouthshire is being short-changed. Money which should be coming into this area as of right is being diverted to other local authorities which, in many cases, have consistently failed to spend to within their targets.
The Conservative group in the Welsh Assembly have been trying to get changes to the formula used for distributing funding to local authorities so that it properly reflects the genuine needs of each area of Wales.
Council tax is largely determined by the amount of money which a local authority (eg Monmouthshire County Council) receives from the Assembly. The lower that amount is, the more council taxes have to rise to make up the difference.
There are two reasons why council taxes have risen each year at levels that are way above the rate of inflation.
The first is that the each year the Council faces a rise in their costs, often due to initiatives which are imposed by the Assembly without being properly funded. The Council has faced a rise in costs because of these extra regulations such as the Teachers Workload Agreement. The difference between what the Council gets from the Assembly and what it has to spend is made up by the Council tax.
The second problem is that formula which is used to determine how much money each local authority gets from the Assembly, (and therefore how much extra they will have to levy in Council tax to meet their costs) is shamelessly skewed against more rural areas such as Monmouthshire.
Monmouthshire suffers from the misconception that it is a “leafy area” which, to quote the former leader of Blainau Gwent, “can afford to pay.” This is simply not true, but on top of the poverty that exists here the costs of maintaining services in a rural area are much greater than in neighbouring urban areas. Road maintenance alone will be vastly more expensive, and as the Free Press recently reported Council officials are warning that the roads are turning into cart tracks because of a lack of upkeep.
This County also has a relatively high elderly population many of whom need help from social services. None of this is properly factored into the formula which the Assembly use to decide how much money to give to each of the 22 local authorities so our taxes go up.
On numerous occasions both inside and out of the Assembly I have spoken out about this issue and highlighted the way in which Monmouthshire is being short-changed. Money which should be coming into this area as of right is being diverted to other local authorities which, in many cases, have consistently failed to spend to within their targets.
The Conservative group in the Welsh Assembly have been trying to get changes to the formula used for distributing funding to local authorities so that it properly reflects the genuine needs of each area of Wales.
posted by David Davies AM at 1:40 AM
3 Comments:
I disagree - it is not the tax that is unfair it is the rises! Nobody was complaining about council taxes until about 1999 / 2000 because they were (in Monmouth ) 136% lower.
The Conservatives would help pensioners by reintroducing the link between pensions rises and earnings and by changing the formula which increases Council taxes in rural areas.
A local income tax would make 3 out of 10 people worse off without solving the root cause of the rises.
The problem with local income tax is that - as Charles Kennedy has said - 1 in 3 housholds would be worse off. A third of the population is a significant number. Perhaps another third would be better off, but the better off they are under this system the worse of will be the third paying more. If you see what I mean.
Also remember under this system any household containing a working couple will be far worse off as they will be paying twice.
For a household with a working married couple and, perhaps one or two working children things will be far worse as they will pay up to four bills yet they will still be receiving the same service.
(sense of deja vu about the poll tax anyone?)
I am not sure whether a local income tax would be standard across Wales or related in some way to spending decisions taken by local authorities but doubtless a Lib Dem could tell me.
But the real problem still remains. You might well be able to help some poorer households, but unless you address the fundamental problem which I have pointed out - ie the Assembly underfunding of local councils - then whichever method of taxation you use the tax will continue to rise.
I have been thinking about an alternative method of local government funding and taxation which I may share with readers of the blog at some point.
I'm afraid you may want to check your own facts - http://society.guardian.co.uk/publicfinances/story/0,12671,1121402,00.html
According to this article Kennedy said that 70% would be better off or unaffected, which is not the same as 70% being better off although he was clearly trying to mislead people into thinking this.
It does mean that 30% - or nearly one in three will be worse off.
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