By Mark Smulian | 13 August 2013
Central government revenues would increase by more than £20bn if Whitehall's tax collection rates were as high as those for councils, the Local Government Association said today.
Central government revenues would increase by more than £20bn if Whitehall's tax collection rates were as high as those for councils, the Local Government Association said today.
The LGA said councils should not have to bear the impact of public spending cuts while the government wasted money by failing to collect all the tax due to it.
It said Revenue & Customs figures showed 93.25% of tax was collected, compared with the 97.7% collection rate achieved by local authorities for business rates and 97.4% for council tax. In addition, most money uncollected by councils was recovered in the subsequent year, with just 0.7% written off, the LGA said.
Central government’s ‘tax gap’ was equivalent to £1,370 for every household in England and Wales.
If R&C achieved the same collection rate as councils it would bring in an extra £20.14bn a year. The LGA said this would be enough to meet the costs of running the police service twice over, and was roughly double the size of spending cuts announced in Chancellor George Osborne's June Spending Review.
R&C figures show uncollected taxes included £14bn lost through evasion and a further £5bn though avoidance with non-payment leading to £4bn in losses, and disputed legal interpretations also costing £4bn.
Publishing the analysis, LGA finance panel chair Sharon Taylor said: ‘We cannot afford for local services like road maintenance, libraries and social care to continue paying the price of those who evade and avoid their tax liability. We all need Government to do better in tacking this.
‘Local authorities collect council tax from more than 22m homes. If councils can obtain more than 97% of this, it is reasonable that Whitehall should be able to match this.’
Taylor urged Osborne to set a timetable for the government to improve tax collection rates.
