The amount of uncollected council tax continues to rise each year, reaching well into hundreds of millions of pounds. Research by the GMB union highlights how between the last two financial years the amount of uncollected tax has risen by £19,468,019 to the sum of £760.6 million in 2006/07. Given that council tax raises £23 billion pa., that is a small proportion (3.3%), but it is nonetheless much higher than for other taxes (like National Insurance, or fuel duty).
In the case of council tax, people who don’t pay up only cost law-abiding taxpayers more the next year as council tax bills increase in an attempt to try and close the gap on the lost revenue. This is not always the case as councils have started to plan for imperfect collection rates, and more people using Direct Debit to pay makes it easier for finance departments to estimate income. Theorectically, although we think the current level of council tax is scandalous, if everyone were to pay their council tax, there would be a broader collection base, which should in turn justify a reduced rate of council tax. But no tax - short of a flat tax - can ever expect to achieve zero per cent evasion and this should not be a condition for cutting bills.
We don’t condone tax evasion, but council tax is by far the most unpopular tax levied on the British public and people are greatly dissatisfied by the returns they get from council tax payments. It is unclear to the average taxpayer how council tax benefits them and councils need to change this. If town halls made a better argument for what council tax revenue is spent on, and reduced the amount of tax that they routinely waste, then people would be more inclined to pay up and the amount of uncollected revenue would decrease. If any tax is seen as unfair, there is always more incentive for those on the fringes to make the effort to avoid it, or risk being caught by evading the tax outright.
Evidently something must be done, and it is individual councils who need to lead the way. Local authorities need to clamp down on tax evaders because it isn’t fair that they are allowed to get away with it whilst the rest of us continue to pay up, begrudgingly forking out each month despite such poor local services. But we don't want to be in a situation where pensioners who cant afford to pay their tax bill (because council taxes have risen by so much more than pensions) are prosecuted for it and made an example of by being given a prison sentence, whereas those who are evading the taxman with no good reason get off scot free because councils find it harder to track them down.