Are we on the verge of a council tax credit crunch?
Over the last few days it has become apparent that council tax rises in the UK for next year will be amongst the lowest in recent history at a time when government finances are being stretched to the limit. While these smaller than expected increases will be welcomed across the board there is some concern that council taxes are being kept artificially low in the short term for political reasons.
It is estimated that councils in the UK have lost in excess of £4 billion in income over the last two years due to the reduced value of land sales, reduced interest on savings and other income avenues which have been affected by the recession. If this is the case, how can councils up and down the country introduced a lowly 1.6% average increase in council taxes?
Many people will be aware that a number of councils up and down the country have held funding back in the past which has been placed into reserve funds for use in troubled times. It would appear that some councils may be dipping into these reserves in the short term to perhaps keep council tax rises lower than they should be in the "normal world".
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