News

Rushmoor approves controversial tax scheme

By Amy Taylor
January 29, 2013

COUNCIL tax benefit in Rushmoor will be replaced by a new scheme where everyone, even the worst-off, will pay a contribution.

The local support scheme was approved by councillors at a special meeting on January 23, despite protest from Labour councillors who said it was unfair on low-income families.

From April 1, everyone of working age living in Rushmoor borough will pay a minimum of 8% towards their council tax bill after the Government delegated authority to local councils to set their own benefit programmes.

While pensioners who receive council tax benefits will see no change to their support, everyone else who is eligible to work could see their benefit income fall.

Those who received benefits for 100% of their council tax bill will see that support fall to 92% – requiring them to pay at least 8% in a bid to encourage people back into work.

Introducing the scheme, council leader Peter Moyle, said: “This was a difficult issue since time was limited – we had to react as quickly as we could to develop a new scheme and address the loss of funding, which was quite huge.

“It was particularly difficult as it affects the more vulnerable in our community, and we have sought to minimise that.”

Neighbouring borough Surrey Heath, covering Camberley, Frimley and Bagshot, have reduced their maximum support level to 70% – requiring people to pay at least 30% of their tax bill, to which Rushmoor councillors responded with disbelief.

Labour councillor Mike Roberts slammed the decision as ‘deplorable’, adding: “The impact on the poorest cannot be comprehensively examined at present.”

Many agreed that Rushmoor’s proposal of 8% was reasonable but Labour councillors proposed that the scheme be reconsidered.

Cllr Alex Crawford said people receiving council tax benefit should continue to get the same level of support, rather than the council claiming what adds up to £431,000 during the 2013/14 financial year from the 3,600 poorest claimants in the borough.

“Early on we were led to believe this meant all recipients of council tax benefit of working age were going to have to pay something more than they do this year.

“I’ve always baulked at that, as it seems most unfair to be imposing extra charges on our poorest, lowest paid residents with the least money, while freezing council tax bills for everyone else.”

He said a hardship fund of £50,000 for the first year, set aside to ease the impact on the worst-off, would not be enough.

“There is the issue of chasing up the 720 poorest, lowest paid in the borough who are not expected to pay up,” he said. “They will end up in court if they cannot pay and they are refused payment from the Discretionary Exceptional Hardship Fund.”

Despite Labour’s concerns, the scheme was passed and councillor Charles Choudhary, who led the working committee which put the proposals together, said it would be reviewed in nine months to ensure the hardship fund was adequate and tax bills were being paid.

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The fact is that the stamp duty bar is set to low and should be zero rated at £250,000 and below and I agree with you that the tax should only apply to the amount over the bar not the whole figure. Why is stamp duty charged on domestic property anyway?

peter hensman
14/03/2013 at 00:23

@peter hensman

Another change to the tax system that could be made to help with the housing market is a reform of the way stamp duty is charge. Stamp duty is now banded and starts at 0% for properties under £125000 rising to a maximum of 7% for properties over £2 million (15% if bought by a corporate body).

As I’ve said the first band is from £0.00 to £125000 and the rate is 0%. The next band is £125001 to 250000 and charged at 1%. The problem is that if you by a property at £125,000 you pay no stamp duty, but if you pay a £1 more for it you are charged 1% of the whole amount. A better way would be to increase the percentage rates beyond the initial 0% rate BUT only charge that rate on the amount of the value that falls in that band (i.e. if the £125001 to £250000 band had a rate of 5% and you brought a property for £150,000 you would pay 5% on £25,000. Under the current system you would pay £1,500 stamp duty, under my “reformed” example you would pay £1,250 stamp duty).

Basically you pay the percentage on the amount that falls in each band, but you have much higher rates for each band. The over £2 million band would probably be around 40% and could be a true mansion tax.

Dawi, Aldershot
13/03/2013 at 17:07

@peter hensman

Well there just isn’t enough space in one of these posts to make a decent argument on what is a very large subject.

There are a whole series of major reforms that need to be taken to get the economy moving, and I agree that costs for small businesses (retail and commercial) are an issue. One way of dealing with this to offset the cost of putting up the NMW and scrapping WTC would be to look at making Business rates “progressive”. At the moment they are all charged I believe at a fix rate per £ of the rateable value of the property (the 2013/14 multiplier rates are Standard 47.1 p and Small Business 46.2p for England outside of the City of London). There are some “reliefs” available to some businesses but these I understand can be quite complicated.

One way of reforming business rates would be on a sliding scale based on the size of the property per square meter. Say for example for units under 1000 square meters the rate would be 10p per square meter for units between 1000 and 2000 square meters the rate would be 20p etc.

The offset in business rates would help small businesses and would offset the increased staff costs from a higher NMW and no WTC. It could also help to encourage more small start-up companies.

Dawi, Aldershot
13/03/2013 at 16:43

@ Dawi I think small companies should be treated as a special case to enable them to pay a higher rate, I would rather help a small company to develope and pay a living wage than to pay out benefits to subsidise low wages, benefits are dead money that will not show a yield, but if you use the same money to help a small company grow and to provide more local jobs you then also help the local economy. Large companies will complain bitterly about the added cost on their wage bill, but it is up to them to reapraise the values they place on their staff. Is Bob in the warehouse worth far less then Robert in accounts. Without Bob the goods will not be delivered to the customer and then Robert will have no customers to invoice. An over simple example but it shows that the existance of one relyes on the other. Both will work equaly hard for their wages but that will not be reflected in the amount that they are paid. Large companies will have to adjust the top of their pay scale to pay a living wage at the bottom. Yes I do agree that we need to build more state owned quality social housing, I have stated quality as that will make private landlords raise their game. New estates should be a mix of social, rent/buy and private, rents should be capped according to there value. The government tells us how much is paid out in benefits but they do not tell us how much the benefits industry is costing us to run. It is an industry that employes 1,000's and costs millions to run. The government is right when they say get people off benefits and into work but to do that they have to supply jobs that pay a living wage and to do that they need to cut the import of cheap labour so that the people of this country have jobs to go to

peter hensman
13/03/2013 at 12:28

@peter hensman “Since writing the post I have spoken with some small companies and with one exception most have agreed that a minimum hourly rate of £8-50 per hour is reasonable BUT they cannot afford to pay it and under the present laws would have to lay off staff”

This is the same argument that a lot of employers were using when arguing against the National Minimum Wage before it was introduced. The problem with Working Tax Credits is that while they have helped a lot of low paid workers, more and more employers are only paying around the NMW, which has caused the WTC bill to balloon. When you couple that with the situation where some companies (generally larger companies) are avoiding paying tax AND benefiting from getting their employee costs subsidized by tax money there is something seriously wrong.

Now in order to get the economy moving involves getting people and organisations spending, which isn’t happening at the moment because of the imbalance between the high-income and low-income households. If low-income households are spending all of their income on just existing (i.e. the basics like a roof over their heads, keeping warm and a putting a bit of food on the table) they are not going to have money to spend on “extras”, if people are not buying, then businesses are stagnating.

Now consider that keeping a roof over your head is probably the biggest outlay each month for most households, there are two ways that making rents affordable can be done, the first is rent control for private landlords, the second is publicly owned housing where you can control those rents at an affordable level which should also “encourage” private landlords to come in at a more affordable level. Either way it should leave a bit more in the pot each month in the low-income households to spend. And spending creates demand, and demand is what keeps the economy moving.

Dawi, Aldershot
13/03/2013 at 10:04

Some will ask why I have attacked the chuch? as a Christian it could be said that the church is my sacred cow and long over due. Maybe it is time for Union members and Labour members to start attacking their sacred cows both like the church have become self satisfied and followers of outdated dogma. Poverty is caused by over taxation, why tax a man into poverty and then pay him benefits? Taxation is the killer of ambition, why encourage people to use education as a stepping stone to success then penalise them with over taxation? Taxation is a stranglehold on industry. suely it is better to encourage industry to grow and provide more jobs

peter hensman
13/03/2013 at 09:15

Jesus is the ultimate street preacher who as well as spreading Gods word gives a voice to those who have none. Our bishops are supposed to to follow His example, but they do not. by ignoring the problems within Islam they are denying a voice to many Muslums who fear to offer an oppinion because of the oppression of Islamist Fundermentalists. Why are our bishops not following following Jesus's lead? Why are they not standing in town centre's talking about the hardship faced by those who need a voice? Why do they speak from behind closed doors?

peter hensman
12/03/2013 at 14:25

I think you need to keep up Pete. As I said this was about taxing the poor and ultmately the thread has been skewed to the point where Islam gets blamed for something, given enough time this always seems to happen with some people.

SpongeBob NoPants, Farnborough
12/03/2013 at 11:56

@ SpongeBob NoPants, Please try and keep up, My attack was against the Bishops who refuse to condem the Islamist attacks upon their fellow believers, if they cannot come to the defence of their fellow Christians how can we expect them to come down from their ivory towers to defend the working class. Yes we have heard mutterings from them about government cuts but they have not come up with a plan B. The Bishops are nothing but selfserving fence sitters who have remained silent for far to long. The reputation of the church has been gained by local congregations under the leadership of their vicars not by the bishops who fail to lead their people from the front. Yes I can be accused of making sweeping statements but there are only a very few bishops such as York and Michael of Rochester (now retired) Who speak out for ordinary people. Yes this post is about the hardship caused by unfare taxation but it is also about those who have allowed it to happen

peter hensman
12/03/2013 at 11:31

@ SpongeBob NoPants, Why is it concidered alright for the Irish, Scots and Welsh to take pride in their country and wrong for an Englishman to take pride in his country. I suppose the fact that I support the rite of Church's, Temples and Mosques not to conduct same sex marrages makes me homophobic even though I believe that they have got it wrong and that homosexuality is a natural part of Gods creation

peter hensman
12/03/2013 at 10:42

Too late Pete, your sins laid bare. This is a thread about the poor being charged council tax in Rushmoor and you managed to end up blaming Islam.

SpongeBob NoPants, Farnborough
12/03/2013 at 10:41

@ SpongeBob NoPants And finally Peter's true colours, Islamophobia backing up the nationalism.

Wrong for further information try a Christian site the Barnabas Trust, Faith Freedom International a site founded by ex Muslums to assist others to leave Islam. It is not only Christians but also Sikh's, Hinu's and Buddists who suffer at the hand of Islam and the main victims of Islam are Muslums. The media reports show that there are massive problems globaly within Islam, almost daily the evidence is placed before you. To play the Islamophobia card is rediculas. Even Muslums are concerned about the problems within Islam

peter hensman
12/03/2013 at 00:41

And finally Peter's true colours, Islamophobia backing up the nationalism.

SpongeBob NoPants, Farnborough
11/03/2013 at 19:36

@ Dawi I wrote on another forum last year that the minimum wage should be raised to £8-50 per hr (a living wage) for a 40 hr week taking many people out of benefits

Since writing the post I have spoken with some small companies and with one exception most have agreed that a minimum hourly rate of £8-50 per hour is reasonable BUT they cannot afford to pay it and under the present laws would have to lay off staff, one idea that they floated was that the money saved from not paying benefits could be used to zero rate NH contributions by small companies, plus money from the foreign aid pot to enable Government to pay small companies development grants for more efficient equipment and interest free short term loans to promote their products. The one exception will not pay a higher rate because he wants a large slice of the cake and will always only pay the minimum wage.

@ Cllr. Alex Crawford

Since 9/11 10,000 of my fellow Christians in Afro/Asia have died at the hands of Islam, the Coptic church in Egypt comes under attack their priests beaten and their church's burnt. The Asyrian Christians in Iraq come under regular armed attack from Islam, Yet are Bishops stay quiet in the house of lords when they should be banging the drum of condemnation and demanding action from the Government.

peter hensman
11/03/2013 at 11:50

Liam Fox Former Tory Cabinet Minister will today say that he wants to freeze public spending for five years to fund tax cuts to get “people” to spend our way out of the economic slump.

Well here are some alternative things that could be done.

First you could raise the National Minimum Wage by the amount that Working Tax Credits pays out, and scrap Working Tax Credits. People would still have the same Take Home amount of money BUT you would cut the benefits bill as well as the cost of administering WTC. Also establish a link between an annual increase in the NMW and the inflation rate of everyday costs (Rent’s, Energy, Fuel and Food).

Use the money saved on the benefits pay out by scrapping WTC to fund the building of STATE OWNED (not private or housing association) affordable social housing. This would stimulate the building industry creating jobs in the building and allied supply chain keeping people in work and paying taxes (rather than being unemployed and claiming benefits). The new social housing would allow the government to control the rents charged, thus lowering the housing benefit bill, keeping money in the public purse rather than in the pockets of private landlords. And when the new properties have paid for themselves you will have an asset that you can sell to fund the building of a new wave of state owned social housing.