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MAIDSTONE BOROUGH COUNCIL
GENERAL PURPOSES COMMITTEE
14 DECEMBER 2011
REPORT OF HEAD OF FINANCE AND CUSTOMER SERVICES
Report prepared by Paul Riley,
Head of Finance & Customer Services
1. COUNCIL TAX TAX BASE 2012/13
1.1 Issue for Decision
1.1.1 This report advises Members of the information currently available on the Tax Base at 14th October 2011 for Council Tax purposes. It also identifies potential changes to that Tax Base, particularly the allowance for non-collection, and recommends the Tax Base for 2012/13.
1.2 Recommendation of Head of Finance & Customer Services
1.2.1 That the
Committee agree that:-
a) pursuant to this report and in accordance with the Local Authorities
(Calculation of Tax Base) Regulations 1992, as amended, the amount
calculated by this Authority as its Council Tax Base for the
year 2012/13 shall be 60,985.3;
b) in accordance with the Local Authorities (Calculation of Tax Base)
Regulations 1992, as amended, the amount calculated by this
Authority as the Council Tax Base for each Parish area as identified
in APPENDIX B for the year 2012/13, be approved.
1.3 Reasons for Recommendation
1.3.1 The Council is required, by law, to set the tax base for Council Tax purposes. The process is as specified in the Local Authorities (Calculation of Tax Base) Regulations 1992, as amended by the Local Government Act 2003. In accordance with the statutory timetable, this decision had to be made by 31 January 2012. The constitution currently allocates responsibility for this decision to this committee.
1.3.2 The setting of the Tax Base in December enables the early notification to preceptors of the Tax Base they can take onto account in planning for 2012/13. It also enables the Cabinet to consider the Governments financial settlement, at its December meeting, with full knowledge of the resources available to the Council from Council Tax.
1.3.3 The basis of the calculation of the Tax Base is the valuation information received from the Valuation Officer and the latest information on exemptions and discounts available. This basic information has been collated, for the whole of the Borough area, and for individual Parish areas. Information for the whole area was supplied to the Government in October 2011 to aid distribution of Revenue Support Grant by the Government.
1.3.4 From the basic information available, it is necessary to assess the Tax Base for 2012/13, taking into account factors such as the potential for change in the property base of the tax, i.e. additional properties being valued, changes in valuations following appeals, changes in the exemptions and discounts awarded. Additionally, an assessment must be made of the allowance for non-collection. Each of these factors is separately addressed in this report.
1.3.5 It is
necessary that a realistic assessment is made of the potential changes to the
Tax Base for 2012/13 as the effects on the cash flow of an under or over
recovery of Council Tax income will fall to this Authority. If the Tax Base is
overestimated there will be a deficit on the Collection Fund which will need to
be recovered through the Council Tax in the following financial year. During
the course of the year the need to finance the under recovery of the tax would lead
to this Authority seeing a reduction in its income from investment and in a
severe case potentially borrowing as a temporary cash flow measure. It is,
therefore, very important that a realistic assessment is made of the collection
rate likely to be achieved in 2012/13, taking into account all the factors
detailed in Sections 1.4 1.6.
1.4
Changes
in Property Base
1.4.1 The base
position for the assessment of the Tax Base for 2012/13 is the information
supplied to the Government in October 2011 which is based on the Council Tax
Valuation List as at 12 September 2011. This shows a Tax Base of 61,101.5 before
consideration of potential changes in the property base during the period up to
March 2013. This involves an assessment of the number of properties that may
move onto or out of the valuation list over the period. Additionally, an
assessment needs to be made of the potential impact of appeals against the
current valuation for each property.
1.4.2 Changes
in Number of Properties The potential for properties moving onto
the Valuation List essentially comprise two situations. Firstly, properties
which have currently not been valued for the purposes of Council Tax and
secondly, new properties which are likely to be built and occupied during the
period in question. Based on information currently available, an increase in
the Tax Base of 288.0 i.e. 0.47% may be anticipated. This will cover approx 324
new properties coming on to the list up to March 2011 after making an allowance
for potential exemptions and discounts.
1.4.3 Changes
in Valuation Bands It is likely that there will be a
minimal number of outstanding appeals lodges with the Valuation Officers.
Based on previous experience of the likely incidence of reductions in valuation
bands as a result of appeals, there may be a marginal and insignificant
reduction in the overall Tax Base.
1.5
Changes
in Exemptions and Discounts
1.5.1 Since
the introduction of Council Tax there has been a gradual increase in the number
of exemptions and discounts along with irregular fluctuations. Additionally, a
proportion of new properties coming onto the Valuation List will be entitled to
exemptions or discounts. It would be prudent to allow a 0.16% reduction (i.e.
an effective increase of approx 98.7 exemptions and discounts) in the Tax Base
to cover potential changes in 2012/13.
1.6 Allowance for Non-Collection
1.6.1 For the purposes of the Council Tax Base for the current financial year, an allowance for non collection of 0.5% was agreed. Based on latest collection information and the potential adverse impact of the current economic downturn, it is recommended that the non-collection rate be retained at 0.5% for 2012/13.
1.7. Local Discretion on Discounts
1.7.1 Previously Members considered a report dealing with the option of reducing discounts on Second Homes and long term empty properties. It is presumed that there will be no change to this policy as a change would require the Tax Base to be amended to reflect the change in the Band D Dwellings for Council Tax setting purposes.
1.8 Overall Assessment
1.8.1 Attached at APPENDIX A is a summary of the Tax Base as supplied to the Government in October 2011 in accordance with statutory requirements. The following table includes an assessment of changes in the property base, changes in exemptions and discounts and the provision for non-collection, as detailed in sections 1.4 to 1.6 above.
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Tax Base as per Appendix A |
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61,101.5 |
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PLUS Provision for changes in Property Base
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288.0 |
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LESS Provision for changes in exemptions/discounts
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98.7 |
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LESS Provision for Non collection (0.5%) |
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305.5 |
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60,985.3 |
Based on
these assessments, the estimated Tax Base for 2012/13 is, therefore, 60,985.3,
an increase of 1.1% on the Tax Base in the current financial year of 60,303.1.
1.9
Tax
Base - Parish Areas
1.9.1 Based on the above assumptions, the Tax Base for each of the Parish areas has similarly been calculated and a summary is attached at APPENDIX B. This calculation is necessary to allow Parish Councils to assess the impact on their local area of the local precept to be raised. Information must be provided to Parish Councils within ten working days of a request by a Parish Council. In previous years the tax base has been considered during January and Parish Councils have been supplied with provisional figures in advance for planning purposes. As the decision will be made in December this year, provisional figures have not been supplied to Parishes as they will receive actual values over one month earlier.
1.9.2 The figures
included in APPENDIX B include the same assumptions on non-collection
and changes in the Tax Base as detailed in this report with a more focused
assessment of new properties.
1.10
Alternative
Action and why not Recommended
1.10.1 The setting of the Tax Base is statutory and therefore there is no alternative to Members considering this Report.
1.10.2 It is possible for a more optimistic view to be taken on the potential changes to the Tax Base. This is not recommended as an increase in the Tax Base would affect the cash flow of this Authority and, if not achieved, would result in an increase in costs through reduced investment income.
1.10.3 The
constitution currently allocates responsibility for this decision to this
Committee however the Local Government Act 2003 amended the Local Authorities
(Calculation of Tax Base) Regulations 1992, taking away the restrictions on the
course for approval of the Tax Base. During 2012 the constitution will be
reviewed and if necessary Council will be asked to consider the reallocation of
this responsibility.
1.11
Impact
on Corporate Objectives
1.11.1 The Tax
Base is an integral part of the Council Tax collection process which is a basic
financial function of this Authority. It is essential for the efficient
funding of all Local Authorities in the area. The income received from Council
Tax, within the overall context of the budget process, provides resources for the
provision of all this Authoritys services.
1.12
Risk
Management
1.12.1 The
major risk relates to any potentially optimistic assessment of the Tax Base, as
this would lead to cash flow problems, during the year, which would reduce
investment income.
1.12.2 However,
increased balances on the Collection Fund, when fed into the overall budget
process, can produce yearly variations which need to be managed as part of the
Budget Strategy.
1.13 Other
Implications
1.13.1
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1. Financial
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2. Staffing
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3. Legal
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4. Equality Impact Needs Assessment
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5. Environmental/Sustainable Development
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6. Community Safety
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7. Human Rights Act
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8. Procurement
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9. Asset Management
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1.13.2 The setting of the Tax Base is an essential part of the budget process and is required by legislation. Any increase in the Tax Base effectively means that the cost of services provided by this Authority and others in the area is being funded by more Council Tax payers and would effectively reduce the Council Tax burden on each tax payer. This relationship however must be realistic in that any underachievement on the collection of Council Tax will mean a result in cash flow problems for this Authority and a loss of investment income.
1.14
Relevant
Documents
1.14.1 Appendices
Appendix A Calculation of the Tax Base October 2011
Appendix B Individual Parish Tax Base Calculation
1.14.2 Background
Documents
None.
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IS THIS A KEY DECISION REPORT?
Yes No
If yes, when did it first appear in the Forward Plan?
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This is a Key Decision because: ..
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Wards/Parishes affected: ..
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