LONDON LOSES OVER £1.3BN IN UNCOLLECTED TAXES SINCE IT STARTED

9.57.01am GMT Tue 16th Dec 2003

Liberal Democrat London Mayoral candidate Simon Hughes MP today revealed new figures that show London's economy has lost £1.3 billion in uncollected Council Tax since it was introduced.

Research using Parliamentary answers show that eleven London Boroughs have been unable to collect over £50m.

Inaccurate council records, tax dodging, and the complicated bureaucracy of collecting Council Tax have left many inner and outer London boroughs out of pocket. Those who pay have been subsidising those who avoid the tax.

Mr Hughes said:-

"Council Tax is unfair, and inefficient. Millions of pounds do not get collected, often leaving the poorest households and poorest boroughs to foot the bill. Those who pay, pay more, or have their services cut instead.

"Four percent of the Council Tax take is spent on bureaucracy. In contrast income tax costs just over 1% to collect. This costly bureaucracy leaves less money for vital services.

"Scrapping council tax would save hundreds of millions in bureaucracy, stop people cheating the system and allow money to be returned to hard-pressed taxpayers.

"If elected Mayor, I would put pressure on Ministers to scrap the hated council tax and replace it with a fair local tax that takes account of people's ability to pay."

ENDS

Notes for Editors

· A detailed breakdown of uncollected Council Tax can be found in the attached Excel spreadsheet. The figures were taken from Parliamentary Answers 135158 and 139216 asking the Deputy Prime Minister what proportion of council tax due was collected in the London boroughs in each year by percentage and by amount.

Research then looked at the amount uncollected over the 10-year period. A table of uncollected Council Tax can be seen in the table below

Area/Borough of London Total uncollected since Council Tax implemented ('000) - Apr 1993 - Apr 2003

Total Greater London £1,331,052.21

Total Outer London £674,233.24

Total Inner London £662,479.26

Lambeth £132,275.78

Hackney £94,587.46

Haringey £75,690.51

Southwark £75,177.54

Camden £62,492.25

Islington £58,599.96

Newham £53,077.98

Croydon £52,903.09

Waltham Forest £51,456.53

Lewisham £50,119.35

Brent £50,057.39

Enfield £47,511.91

Greenwich £41,962.13

Haling £41,655.02

Hammersmith & Fulham £41,053.35

Barnet £40,670.60

Hounslow £39,338.29

Tower Hamlets £31,402.63

Hillingdon £29,218.72

Wandsworth £28,976.83

Kensington &, Chelsea £26,990.23

Westminster £24,915.06

Bromley £24,073.51

Bexley £23,574.77

Redbridge £23,193.92

Merton £22,402.03

Havering £20,920.29

Richmond upon Thames £19,220.02

Kingston upon Thames £18,426.22

Barking & Dagenham £15,075.95

Harrow £13,129.54

Sutton £11,113.59

City of London £383.94

What's Wrong With The Council Tax ?

Grossly unfair to people on low and medium incomes, especially pensioners

The Council Tax takes no account of a person's income and their ability to pay tax. So a pensioner couple, living on a meagre income, can pay as much in Council Tax as a high earning professional couple. The poorest 20% of pensioners pay nearly 6 times more than the richest 20% of non-pensioners, as a proportion of their income.

Costly to collect and administer:

The total cost of simply administering the Council Tax system was £569 million in 2002/03. We estimate it costs almost 4 times as much to collect £1 in council tax, as it costs to collect £1 in income tax. The high costs result from having tax collection systems in each billing authority, plus the expensive council tax benefit system, which suffers from take-up problems. Costs will increase with the council tax revaluation planned by the Government.

Last year state pensions were increased by just 2.6%

But council tax across the country increased by 13%

"2 million households, many of them pensioners, do not claim council tax benefit since the process is too demeaning or complex". Source: Municipal Journal

How Does The Government's Funding System Cause High Council Tax?

· A shortfall in grant from the Government, combined with demands from Government to spend more explain this years dramatic increases in council tax across the country.

· The "gearing effect" means that large increases in Council Tax were needed to fill the funding gap. The only alternative is service cuts.

This year's shortfall caused Council Tax to rise by 13%.