Thursday 24 November 2011

Councils will not turn down the tax freeze offer

There has been much media coverage today about a survey into whether councils intend taking up the government's offer of funding a 2.5% rise in council tax from next April in order to create a freeze. According to a sample of 146 council finance directors, '20%' may not take up the offer.
I'm puzzled by the attention given to the survey. The percentage of councils likely to reject this offer is actually only 4% i.e. 7 with the remaining 16%, about 21, undecided. They are undecided because as yet they haven't made up their minds, quite probably because a decision about council tax rises for next April has not yet been taken by their authority.
It will be almost impossible for a council to tell its taxpayers that it has turned down a subsidy from the government in order to put its tax up by 5%. The government knows it is a populist gesture which shows it feels voters' pain. Long-term it will whittle away councils' tax base but in the short-term councils have little choice but to accept it or face derision followed by extinction at the next local polls.
Mark my words, come next spring councils will take up this offer.

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