Tax by another name

January 22, 2008 5:39 PM

The Audit Commission's new 'Positively Charged' report raises some interesting issues today. For the first time it puts a figure on the massive amounts raised by councils through extra charges - on car parking, waste disposal and numerous other services - as a whopping £10.8 billion. To put that in context, it's half as much as they raise in council tax, which demonstrates why this really ought to be a huge issue. The reason it hasn't been so far is that there hasn't been a comprehensive overview of the national picture on charging - until now.

Battery_2
The name of the report, and its pun-tastic Shiny Battery logo (see right) demonstrates that the Audit Commission are big fans of charges. As well as totting up the vast amount raised through charging, the report is peppered with comments about the "benefits" of charges and understanding the "contribution" they make.


The reality is very different.


There is a certain amount to be said for the principle behind the idea that if you use it you should pay for it, replacing a burden on the general taxpayer with a specifically targeted charge to those involved in incurring the cost. The problem is, that is not what is happening on the ground.


Nowhere are charges being used to replace taxes, lighten the load or make taxation fairer. When have you ever heard a council say that they are introducing a bin tax and cutting council tax in return? Never.


Similarly, the bluff can be called by offering to carry out a service yourself instead of paying the charge. South Cambridgeshire Council recently introduced a charge for people who needed new wheelie bins, claiming the £60 fee was for "delivery". They then refused to let people collect the bins themselves for free, exposing the scam for what it was - an extra tax. It will come as no surprise to readers to learn that the money supposedly saved by the introduction of the charge has not been reimbursed in tax cuts for the wider population.


This clearly isn't about reorganising the distribution of weight in the tax system, it is about increasing the overall burden - adding extra charges on top of existing (and constantly growing) taxes. Many councils are increasing council tax by a certain amount and slapping selective charges on top. There is no corresponding reduction offered to the wider taxpayer on the basic rate of council tax.


Worse, some councils are trying to add universal charges on top of council tax - i.e. simply abusing the concept to dress extra council tax up as charges. This is a stealth tax in the full meaning of the word.


Especially now the Government is beginning to realise the damage that can be done to them electorally by public anger about council tax, we can expect to see this cynical approach used more and more. When councils who have been squeezing embarassing sums out of people find their tax capped to limit the rise, they will increasingly turn to charges as a way of continuing to raise tax whilst disguising the fact. It is no coincidence that South Cambridgeshire are one of those councils who have found themselves capped, and are no wheeling and dealing in the field of innovative charges.


The report even quotes an anonymous Finance Director as saying

Without charging there'd be a black hole in our budget

and he's right - but that's the problem, not a justification for the use of stealth taxation. If councils weren't using this route to disguise extra taxation, the true severity of the problem of council tax would be revealed. Politicians would have to face up to the truly unsustainable levels of council tax, as being more than £34bn rather than the £24bn commonly cited. As it is, this cloak and dagger approach is allowing them to pretend the problem isn't as bad as it is.


That is why we are not hailing these charges as the "positive contribution" that the Audit Commission claim. These charges are being abused as a way of hiding extra council tax, and if the AC want charges to be used properly and productively they should have highlighted that abuse and warned against it.

The Audit Commission's new 'Positively Charged' report raises some interesting issues today. For the first time it puts a figure on the massive amounts raised by councils through extra charges - on car parking, waste disposal and numerous other services - as a whopping £10.8 billion. To put that in context, it's half as much as they raise in council tax, which demonstrates why this really ought to be a huge issue. The reason it hasn't been so far is that there hasn't been a comprehensive overview of the national picture on charging - until now.

Battery_2
The name of the report, and its pun-tastic Shiny Battery logo (see right) demonstrates that the Audit Commission are big fans of charges. As well as totting up the vast amount raised through charging, the report is peppered with comments about the "benefits" of charges and understanding the "contribution" they make.


The reality is very different.


There is a certain amount to be said for the principle behind the idea that if you use it you should pay for it, replacing a burden on the general taxpayer with a specifically targeted charge to those involved in incurring the cost. The problem is, that is not what is happening on the ground.


Nowhere are charges being used to replace taxes, lighten the load or make taxation fairer. When have you ever heard a council say that they are introducing a bin tax and cutting council tax in return? Never.


Similarly, the bluff can be called by offering to carry out a service yourself instead of paying the charge. South Cambridgeshire Council recently introduced a charge for people who needed new wheelie bins, claiming the £60 fee was for "delivery". They then refused to let people collect the bins themselves for free, exposing the scam for what it was - an extra tax. It will come as no surprise to readers to learn that the money supposedly saved by the introduction of the charge has not been reimbursed in tax cuts for the wider population.


This clearly isn't about reorganising the distribution of weight in the tax system, it is about increasing the overall burden - adding extra charges on top of existing (and constantly growing) taxes. Many councils are increasing council tax by a certain amount and slapping selective charges on top. There is no corresponding reduction offered to the wider taxpayer on the basic rate of council tax.


Worse, some councils are trying to add universal charges on top of council tax - i.e. simply abusing the concept to dress extra council tax up as charges. This is a stealth tax in the full meaning of the word.


Especially now the Government is beginning to realise the damage that can be done to them electorally by public anger about council tax, we can expect to see this cynical approach used more and more. When councils who have been squeezing embarassing sums out of people find their tax capped to limit the rise, they will increasingly turn to charges as a way of continuing to raise tax whilst disguising the fact. It is no coincidence that South Cambridgeshire are one of those councils who have found themselves capped, and are no wheeling and dealing in the field of innovative charges.


The report even quotes an anonymous Finance Director as saying

Without charging there'd be a black hole in our budget

and he's right - but that's the problem, not a justification for the use of stealth taxation. If councils weren't using this route to disguise extra taxation, the true severity of the problem of council tax would be revealed. Politicians would have to face up to the truly unsustainable levels of council tax, as being more than £34bn rather than the £24bn commonly cited. As it is, this cloak and dagger approach is allowing them to pretend the problem isn't as bad as it is.


That is why we are not hailing these charges as the "positive contribution" that the Audit Commission claim. These charges are being abused as a way of hiding extra council tax, and if the AC want charges to be used properly and productively they should have highlighted that abuse and warned against it.

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