To ask the Scottish Executive, further to the answer to question S2W-20144 by George Lyon on 9 November 2005, whether it will estimate what the total cost to it would be of making all pensioners wholly exempt from paying council tax with the proviso that any such estimate is a speculative one.
Council tax is levied on households. Estimates of the costs of making pensioners exempt from paying council tax will vary according to how exemptions are applied.
For example, treating pensioners as “disregarded adults” for the purpose of council tax would give households made up solely of pensioners a 50% discount, but would give no benefit to households comprising two or more non-pensioners and one or more non-pensioners. Alternatively, making “pensioner households” completely exempt from council tax requires a rigorous definition of whether only households containing only pensioners should be exempt, whether any household containing at least one adult of pensionable age should be exempt, or whether some more complicated set of qualifying households should be defined.
Furthermore, such policy changes would significantly alter the taxable base within each local authority, and some areas have a greater proportion of pensioners than others. In order to ensure that other taxpayers in the local authority were not subsidising the cost of the exemptions, an annual adjustment to the local government settlement would have to be undertaken to reimburse councils for the costs of the exemptions. This would be a significant administrative burden, and would have to be repeated each year as the population demographics change.
Finally, a significant number of households who might be affected by such policy changes will be in receipt of council tax benefit, paid for by the Department of Work and Pensions (DWP). Making pensioners or pensioner households exempt from council tax would therefore result in a saving to the DWP, and a loss of income to local authorities. Information on the household composition of Scottish households currently in receipt of council tax benefit is not held by the Scottish Executive.
Given the many policy options, therefore, it is not possible to provide reliable estimates of the total cost.