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MPs criticise 'fundamentally perverse' council tax incentives

The incentive to work for some families has withered because of changes to council tax benefits, with some losing as much as 97p out of every extra pound they earn, the Public Accounts Committee has found.

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'230 authorities' require minimum council tax payment

Almost three quarters of local authorities (71%) required all working-age claimants to pay at least the minimum contribution towards their council tax bill, according to the Public Accounts Committee.

They also found:

  • There were only 133 authorities which provided exemptions only for pensioners and war pensioners, whom the Government insisted must be protected.
  • Some 19 local authorities, representing 225,000 working-age claimants in England, increased the "taper rate" at which support is reduced as income rises from 20% under the old system - some 14 of them increasing it to 25% and four to 30%.
  • Taper rate increases combined with the loss of housing benefit and increase to income tax and national insurance, would mean claimants taking on additional work they would lose 93p of every £1 they yearend on a 25% rate of 97p on a 30% rate

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