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Devolution deadlines and tax collection: the challenge for Welsh councils

From 2018, the Welsh government will have control over setting and collecting stamp duty, land tax and landfill tax, with local councils expected to take on much of the day-to-day work. The opportunities are great, but the timing is troublesome.

Devolution in the pipelineDukes-Welshcouncils

With the expertise and local knowledge at council level, it’s not surprising that the Welsh Local Government Association (WLGA) has argued that councils are “best placed” to collect and manage the newly devolved taxes, but there are serious matters to consider before a final decision is made. Particularly in light of proposed boundary changes and council mergers designed to combat the crippling impact of central government cuts.

Public Services Minister Leighton Andrews has suggested that a map of proposed changes will be published before the summer, ahead of a draft bill being published for consultation. But, with maps yet to appear, Gwynedd council leader Dyfed Edwards says the current system is "bleeding to death" and called on the Welsh government to move faster.

What to expect

From our perspective, there are two key challenges. Firstly, working out a clear, actionable, cost-saving plan when so much uncertainty remains. Secondly, ensuring that tax collection and management systems are sufficiently stable and effective for the added burdens planned for 2018.

The solution proposed by the Finance Committee of the National Assembly of Wales in their May report is that the 2018 deadline be changed, allowing for a phased approach to the introduction of new tax collection responsibilities.

In our view, the Welsh government must meet Mr. Edwards’ demand to publish the maps and draft bill as soon as possible so that local authorities get on with assessing the actual financial impacts of boundary changes.

Renewed focus

In the meantime, particularly in light of the Finance Committee’s recommendation that the Welsh government “consider making use of local government expertise and flexibility of practices in relation to tax recovery”, we strongly recommend a renewed focus on improving tax collection practices: particularly targeting repeat non-payers, and contacting and engaging with those who are genuinely struggling to pay.

In the short to medium term it can help revenue, and in the long term it will set authorities on a solid path towards meeting the obligations likely to be thrust upon them in 2018 – phased or otherwise.

For advice on effective, ethical debt collection solutions, contact a Dukes Bailiffs advisor today.

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