GB News: Expert discusses potential rise in Council Tax
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County councils have warned without further grant funding from the Treasury, they would need to hike council tax bills by up to eight percent for each of the next three financial years to balance their budgets. The councils argue that the “legacy of coronavirus” – including more demand for children’s services and higher adult social care costs – will increase pressure on their future finances.
The County Councils Network finance spokesperson Carl Les said that using “large-scale council tax rises to make up our funding shortfall would be unacceptable and unfair for hard-pressed residents”.
He said: “It would also be an unsustainable approach to funding services, raising variable amounts across the country.”
He added: “The Government’s levelling-up agenda must begin with making public services adequately funded.”
Councils have warned services could be severely cut if funding does not appear.
Is council tax going to rise?
The Treasury is understood to be considering allowing councils the freedom to change how much they tax residents in their local areas.
Researchers from the Institute for Fiscal Studies has said local authorities could push up council tax bills by five percent a year for Brits – as a minimum requirement.
On average, a five percent rise could take an additional £220 out of ordinary peoples pockets.
The IFS said under current government spending plans, council tax bills will need to rise by at least 3.6 percent a year just to keep services running at pre-pandemic levels.
Council tax is used for funding local services, such as street cleaning, policing, public transport, housing and fire services.
Funds for these come from council tax as well as top-ups from the UK and devolved governments – but central government funding was slashed by the Tory Government in 2019 to 2020, right as the pandemic hit.
The Local Government Association said councils “continue to face severe funding and demand pressures that will stretch the local services our communities rely on to the limit”.
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Kate Ogden, a research economist at the IFS, said: “The Government has stepped up with billions in additional funding for councils to support them through the last 18 months, it is likely to have to find billions more for councils over the next couple of years if they are to avoid cutting back on services, even if they increase council tax by 4 percent a year or more.
“The coming financial year is likely to be especially tough, with the likelihood of at least some ongoing COVID-19-related pressures, and a particularly tight overall spending envelope pencilled in.
“At the same time, Government needs urgently to deal with a local government funding system which is becoming hopelessly out of date, being based on population levels and characteristics in 2013.
“This results in manifest unfairnesses in the distribution of resources between councils.”
However, some experts don’t believe direct taxes will rise any further.
Charlotte Sallabank, tax partner at Katten Muchin Rosenman LLP, told Express.co.uk: “As the increase in national insurance contributions has already been announced and corporation tax is set to rise to 25 percent in 2023 it is unlikely that any other significant increases in direct tax rates will be announced.”
The pockets of Brits will soon be feeling the squeeze from the National Insurance rise, which will begin in the new fiscal year from April 2022.
But as Boris Johnson’s Government has faced severe backlash from its supporters and much of the public over the National Insurance rise previously announced, the question of whether Mr Sunak will dare raise anymore direct taxes will remain to be seen.
Changes will be announced by Mr Sunak during the unveiling of the Budget on October 27.
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