Newcastle's Council Tax calculation method will penalise the poorest.

January 13, 2020 4:11 PM

Cllr Colin FergusonLiberal Democrats' finance spokesperson in Newcastle, Cllr Colin Ferguson, has objected to the way that Councillors have been asked to agree to an annual uprating of Council Tax Relief Income Bands in line with the Retail Prices Index (RPI), and to agree to remove this from further consultation & scrutiny in future years.

He has told Councillors : "RPI is a statistical measure that tracks price increases. A measure of inflation - and the higher of the two commonly used, at that - is not a measure of wage & benefit increases. Inflation has typically risen faster than wages in recent years, but no-one can guarantee that this will always be the case. If wages and benefits show above inflation increases over time, any mismatch has tghe potential to penalise the least well off in our city.

"It is the party opposite that frequently decries the use of RPI as a cost increase measure in national matters, and I think we should regret its use now. Perhaps you may make the argument that it is the measure that takes house prices into account, and it is therefore the "correct" one to use in the circumstances. But it fundamentally does not reflect real changes in wages & benefits, which is surely the more relevant consideration for those the Council Tax Relief process is supposed to support.

"I see no reason why this long-term commitment, which stands to penalise the least well off in our City over time, must be made tonight, and made in this way. We can agree the Council Tax Base and comply with our statutory obligations, without agreeing long-term changes to increases in the Income Bands used to assess eligibility.

"I would urge the Cabinet member to rescind this proposal and think again. The Liberal Democrats cannot support it." Despite this well-made argument, Labour concillors pushed through the measure.

In the same debate on Council Tax and Business Rates, Cllr Robin Ashby said : "There is scant information in this report about Business Rates except reference to a submission that has to be made to the DCLG by the end of the month. There is no background paper analogous to the five on Council Tax.

"We are increasingly dependent on our kickback on business rates from central government.

"So can the Cabinet Member assure us that we will be better briefed on this before the Budget is discussed? (No such assurance was given)

"There is a report back at length on the very thin public response to the consultation exercise. But there is no mention I've been able to find to any consultation with the business community.

"A revolution once took place fired by the slogan "no taxation without representation". And while it is unlikely that the business community will be storming the Ringtons tea factory any time soon, it has the right to feel aggrieved that it is being neglected.

"So further, can the Cabinet member give us any assurance that businesses will be specifically consulted on the budget process and in particular on those services directly relevant to them and which they are helping to pay for? And will Council members receive feedback of equal detail to those 69 local people whose opinion is reported back on in the report? (Again no proper answer)

"Having said that I would not like anyone to think that I support the Business rates system. It is seriously flawed, out of date, in need of revision and greater clarity. Or better yet, abolition. My party has proposed that business rates should be abolished and replaced by a Commercial Landowner Levy based on the value of the land only, paid by owners rather than tenants

"Commercial land should be taxed regardless of whether the buildings above it are occupied so the tax would also apply to unused and derelict commercial land.

"The manufacturing and technology sectors would be the most significant beneficiaries of the Commercial Landowner Levy, as well as boosting retailers. Overall this would reduce property taxes in Newcastle by around 7% while ensuring that land and property speculators in places like the West End of London pays a bigger share.

"Perhaps such fairness and encouragement of the wealth creators might find some support beyond this side of the aisle."