A rise in council tax?

It goes against the grain to suggest an increase in Council Tax, particularly against a background where other councils, including MSDC, are likely to take Eric Pickles’s subsidy, and freeze council tax for their residents in 2012/13.  Conservatives in theory should look wherever possible to keep taxes in check, it is what we do,  and as a good Conservative I am no enthusiast for increasing taxes.

However, the Government, in part through lack of transparency with regard to its intentions going forward, have put councils in a difficult position. Babergh took their money last year, and froze council tax.  The issue now is should we do so again?

For every year that we take the Government’s money, which this year and next equate to a 2.5% increase, we lose the benefit of uplift in our tax base.  Future percentage changes in tax are thus made on the basis of the lower amount, so each year that we take Pickles’ shilling costs us money that is lost forever.

The Government has pointedly made no promises with regard to this money in future years but history tells us that it would be naive to assume that this means that they will allow us carte blanche with regard to the level of council tax increases in the years to come.   As the General Election approaches in 2015, the Government will, as it has done in the past, be keen to be seen to be curbing council tax increases.  Mandatory capping, which has been seen regularly ahead of elections in the past, is highly likely.

Thus is seems right that we increase council tax, and also the level of our tax base, while we can.  The 3.5% increase, which is being proposed, is still below the rate of inflation.  It is also, it has to be said, the most that we can do without triggering the possibility of a referendum in 2012/13 under the new Localities Act.

Babergh’s council tax is the second lowest in the county, and represents very good value for money. This will remain true even after the imposition of the proposed 3.5% rise.  In financial terms per household we are not talking about a lot of money: the cost per household (Band D) will be less than £5 per year, or 9 pence per week.

It would however reduce our budget shortfall  by around £45,000, and also strengthen our charging base in future.

The debate is ongoing.  The budget will be discussed at the Strategy Committee on Thursday, and a special council meeting being called for later in the month.  I am still weighing up all the pros and cons, but subject to some convincing evidence to the contrary, the case for a below inflation rise in Council Tax next year is hard to resist.