50 per cent will not pay new tax
UP TO half of all residents expected to pay council tax for the first time under Government welfare cuts will refuse.
And it could cost authorities more to chase debts than the total amount owed.
Tens of thousands of residents in North Staffordshire will be hit with council tax charges for the first time from April as local authorities are put in charge of tax benefits within their boundaries.
They will receive 10 per cent less funding than the amount currently paid to claimants by the Government, meaning thousands face benefit cuts.
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But new figures suggest up to 50 per cent of those charged for the first time – about 20,000 people in Stoke-on-Trent – will not pay.
Stoke-on-Trent City Council is proposing a 65 per cent cap on the maximum tax benefit claimed.
It means thousands of the city's poorest residents, who are currently ineligible for council tax, face an annual bill of £324 in Band A properties.
And it may cost more in legal recovery fees than the amounts residents refuse to pay – an average of £6.20 per week for first time payers.
Tristram Hunt, Labour MP for Stoke-on-Trent Central, pictured below, said: "This is a looming catastrophe for local authorities because they will be legally required by the Government to pursue every outstanding amount and yet it is going to cost more to pursue it than the amount unpaid.
"It's a 10 per cent cut, but in excluding pensioners the cuts for everyone else will be much, much higher and in low income areas like Stoke-on-Trent – where people are finding it hard to make ends meet – it will be very difficult.
"In an ideal world everybody pays tax in full and on time. But faced with terrible choices on paying a tax bill or feeding families, we know people will protect their families."
The council has improved its collection rates after allowing debts to mount, but officers are braced for a fresh increase.
The authority's deputy leader Paul Shotton said: "We'll work hard to distinguish between taxpayers who can't pay and those who won't pay.
"We do all we can to help residents who are having difficulties paying.
"For those who face considerable hardship or those who have multiple arrears, we assess each case on its merit and may agree to extended repayment arrangements."
More than 5,000 residents face a cut in benefit payments in Newcastle.
A Newcastle Borough Council spokesman said: "We envisage there will be an increase in arrears due to the fact people who have never had to pay council tax will now be required to.
"We are now putting steps in place to monitor this."
The study was conducted by False Economy, a campaigning group part-funded by unions.