Tag Archives: council tax

Council Tax Debt Tip Sheet

Council Tax Debt Tip Sheet


 

Who Can Help?

There are plenty of free services in Scotland that are experienced at dealing with Council Tax debt such as:

These organisations will automatically check if it’s possible to reduce how much you owe, before they even suggest you pay anything.

This involves checking whether you are entitled to a Council Tax reduction, discount or even exemption. All of these, if successful, can help reduce the amount you owe, even to the extent you might not owe anything.  

For more information: visit Advice Scotland Council Tax Hub

Council Tax Freeze Failing the Poor

Council Tax Freeze Failing the Poor

If further evidence of the Scottish Government’s non-commitment to social justice is necessary, then one only need look today at the Annual Budget meeting of Glasgow City Council.

For the seventh consecutive year it will go through the formality of setting council tax rates. I say formality, as like many Glaswegians I have already received my bill for 2014-15 which sets the Council Tax rates at the same level they were at in 2006-07.

The Council Tax freeze is represented by the Scottish Government as a socially progressive policy which protects hard up families. However, there is now a growing body of evidence to show that’s what the Council Tax freeze is not doing.

Citizen Advice Scotland is reporting that although overall levels of personal debt are now falling, Council Tax arrears along with payday loans are increasing.

The Scottish Diligence Statistics for 2012-13 also show that over quarter of a million Charge for Payments were served on non-payers; whilst almost 203,000 bank accounts were arrested and 134,000 earning arrestments were executed.

When that level of formal debt enforcement is required in a country Scotland’s size, questions must be asked: are levels too high; or is the tax broken altogether?

I would say the latter.

The Joseph Rowntree Foundation has also warned that the true beneficiaries of the policy have been better off, middle class families and not the poor; whilst Local Government trade union, Unison, has called for Local Governments to be allowed to set the rates again, pointing to the fact the brunt of the freeze is being felt by cuts to vital services, which the poor depend on.

Others, such as Professor David Bell from the University of Stirling have delivered reports showing the most effective way for the Scottish Government to reduce inequality now, is not to freeze Council Tax rates, but to use existing powers to increase the gaps between Council Tax bands.

If the Scottish Government is committed to increasing social equality and avoiding the poorest facing rising personal debt levels, the evidence is clear: they would be better reforming local taxation law and using the powers they currently have, than sticking a plaster over a broken system; whilst wasting parliamentary time introducing punitive measures such as they are doing with Clause Four of the Bankruptcy and Debt Advice (Scotland) Bill 2013.

What we are seeing is the same lack of commitment or understanding that led to the unnecessary delays in neutralising the effects of the bedroom tax and the increase in application fees for Low Income, Low Asset Bankrupts (which it was argued at the time was necessary to generate an additional £460,000 of income, but then led to a 60% drop in the numbers able to apply in a year in which the Accountant in Bankruptcy then went on to report a £1.3 million underspend).

Two thirds of Scots have even said in a recent Mori Poll, presumably those that can afford the current rates that they would be prepared to pay more in local taxation if they were assured it was to be spent on local services.

The reality is the only other beneficiaries of the continued Council Tax freeze, other than better off, middle class families, are the Sheriff Officers who are now being paid millions by local tax payers to collect debts that simply many cannot afford.

Six Ways For The Scottish Parliament To Now Tackle Poverty

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As the Scottish Government take their turn to do the okey cokey and shuffle the cabinet, I suggest some ideas the Cabinet Secretaries and Ministers may wish to consider that could help reduce poverty and the worse effects of it in Scotland.

Margaret Burgess (Mininster for Housing)

We have already seen significant advances in housing law over the last few years, with Part One of the Home Owner and Debtor Protection (Scotland) Act 2010, the Housing (Scotland) Act 2010 and the Private Rented Housing (Scotland) Act 2011.

Here, however, is an interesting suggestion by Jon Kiddie, the Principal Solicitor of Renfrewshire Law Centre to end evictions during the coldest months of the year. Similar rules already exist in many EU countries. Why not have similar protections in Scotland, one of the coldest and wettest countries in Western Europe?

Fergus Ewing (Minister for Energy, Enterprise and Tourism)

Or what if we follow the example of Norway and use our legislative authority over debt laws to right down mortgages when people are facing repossession and have negative equity?

Often people get into arrears as they can no longer maintain their mortgage payments. This result in their homes being repossessed and sold at a loss as they have negative equity. If we acknowledge the lenders are going to suffer a loss anyway, why not allow for the debt to be reduced and allow the borrower to repay the loan at the reduced rate?

We will have a new Bankruptcy bill  introduced in this parliament. As I have already blogged we should be bold and recognise the role such laws can have in not only assisting economic recovery, but freeing people from the vicious cycle that is caused by debt, whilst providing a social safety net for the poorest.  We could draw on the laws of Canada and the United States and increase protection for homes in bankruptcy by protecting certain levels of equity. This would allow more to access the remedy where debts are no longer manageable, without placing homes at risk.

We could also introduce a new Debt Payment Programme for pay day loans as has been suggested by Mike Dailly, Principal Solicitor of Govan Law Centre which he has blogged about here and I have also covered.

[polldaddy poll=6515109]

John Swinney (Cabinet Secretary for Finance)

We all know before the last election The Scottish Government had its efforts to reform local taxation (the council tax) blocked by Labour.

What’s now stopping us?

Council tax is recognised as an unprogressive form of taxation and even those on income support have to pay water and sewage charges.

Under the last Labour Government there was no guarantee also that if Scotland did replace local taxation with a Local Service Tax that the funds currently given in Council Tax Benefit would continue. The Coalition has now, however, devolved this benefit to the regions, including Scotland.

However after they made cuts, Scotland is now funding a benefit shortfall of £40 million per year on top of the current Council Tax freeze.

Why not reintroduce a bill to reform this tax and make local taxation fairer?

Mike Russell (Cabinet Secretary for Education and Life Long Learning)

More often than not, poverty is  the result of low income, illness and unemployment as well as an array of other issues. However, greater financial education can only help Scots.

Financial education should be taught in all primary and secondary schools. We must equip our children with the skills they need in a world where many by the age of 20  will already be sinking  into a sea of debt.

Enforcement of Debt (Scotland) Bill Required

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By Alan McIntosh

John Wilson, MSP, Enforcement of Local Tax Arrears Bill proposal has opened up an important issue in Scotland regarding the enforcement and extinguishing of the obligations of debtors to repay their debts.

Scottish Debtors are currently at a disadvantage to debtors in other parts of the UK, in that debts can be pursued in Scotland for longer than they can in England, up to twenty years or more, once a court order or its equivalent has been obtained. In England, there is no automatic right to enforce a debt using legal enforcement (or distress) after 6 years. This encourages bad practice in Scotland, meaning bad debts can be held over people for an extraordinary long period of time. This encourages debt purchasers who buy debts, sometimes for pennies in the pound to then use the full force of the law to harass and persecute debtors who have reasonably assumed the original creditor has abandoned their right to pursue the debt.

John Wilson’s draft proposal concerned only local tax arrears and the pursuit of them using the summary warrant procedure, which only local authorities and Her Majesty’s Revenue and Customs can use. The debate, however, should be wider and look at the enforcement and extinguishing of a debtor’s obligations to repay all debts.

I would call for:

  • The prescriptive period for enforcing local tax arrears being reduced to five years;
  • Debtors having a statutory right of recall when served by a summary warrant by local authorities or Her Majesty’s Revenue and Customs Department;
  • That no court decree for payment of money, or summary warrant, should automatically be enforceable after five years, unless the creditor can show exceptional circumstances for not enforcing the debt earlier; and
  • That local authorities and HMRC,  who use summary warrant procedure, being allowed to enforce debts constituted by summary warrant  by executing and registering inhibitions on the property of debtors.

My full paper, The Enforcement and Extinguishing of Debtor Obligations in Scotland can be read here.