PAPER B

RESOURCES SELECT COMMITTEE - 18 DECEMBER 2003

LOCAL GOVERNMENT ACT 2003 – COUNCIL TAX ON SECOND HOMES

REPORT OF THE CHIEF FINANCIAL OFFICER

REASON FOR SELECT COMMITTEE CONSIDERATION

The matter of discount for Council Tax on second homes forms part of this Committees work programme.

ACTION REQUIRED BY THE SELECT COMMITTEE

The Select Committee is invited by the Executive to make its recommendations as to the level of discount on second homes and the date for that discounts implementation

BACKGROUND

Owners of second homes currently have a mandatory right to a 50% discount on Council Tax payable in respect of the second home.

The Local Government Act 2003 gives the Secretary of State powers to make regulations allowing billing authorities to reduce the discount on prescribed classes of property. It is understood that regulations will shortly be introduced which will permit the discount to be reduced to as low as 10% of Council Tax Payable, with effect from April 2004.

RELEVANT PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS

The provision of the new bill enables local authorities to determine the rate of discount and the amount that all local property owners contribute to the cost of Council service provision.

At its meeting on the 3^rd December the Executive resolved to recommend to Council as follows:

i) That the Executive recommend to Council that it exercises the power to set the level of discount on second homes.

ii) That a final decision on the level of discount be taken following the budget consultation process.

iii) As part of that process the Council should seek to maximise revenue in the support of its policy objectives, for example those in relation to social housing.

CONSULTATION PROCESS

The introduction of the provisions of the Local Government Act and the introduction of the new regulations was subject to national consultation with local authorities and their representative organisations.

FINANCIAL, LEGAL, CRIME AND DISORDER IMPLICATIONS

Any additional monies arising from a reduction in the level of discount, would be retained locally. There are currently over 3000 second homes on the Island and a potential income in the region of £1 million, if a 10% discount was introduced and all associated Council Tax could be collected. Detailed regulations are now before Parliament and will become law on the 18^th December 2003, the regulations provide for a new level of discount to be effective from 1^st April 2004.

BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT

Local Government Act 2003

Council Taxbase

Contact Point : Gareth Hughes, Financial Services Manager, telephone 823604

and e-mail [email protected]

GARETH HUGHES

Financial Services Manager