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Sharp rise in debts written off; Council forgoes pounds 422,000 of tax.

Byline: By PETER YOUNG Political Editor

A BIG increase in council tax debts written off in Newcastle because householders have gone bankrupt or done a flit was revealed today.

The city council is planning to write off pounds 422,000 compared with pounds 52,000 for the previous 12 months, though many of the debts stretch back to 1992.

Civic Centre officials say the rise is because improved systems mean they can more easily identify debts which cannot be collected, rather than more people slipping into arrears.

However, there is a warning that council tax and business rate debts are expected to grow as hard-pressed families run into financial problems and more companies go bust because of the economic downturn.

Uncollectible council tax debts include pounds 311,000 as a result of individuals going bankrupt and pounds 84,000 from people disappearing without paying their bills.

Total council tax arrears currently stand at around pounds 15.2m, compared with pounds 17.6m three months ago. Officials aim is to reduce that by a further 30% by March.

Latest figures reveal that pounds 1.1m is being written off as a result of businesses going bankrupt or into liquidation during 2007-08.

Councils collect business rates on behalf of the Government.

In a report to councillors, city treasurer Paul Woods said: "The economic climate will impact on the level of write-offs. The more businesses that go bankrupt, the greater the non-collection levels."

On individual council taxpayers, Mr Woods said: "Council tax debts relate to accounts deemed uncollectible in 2007-08, but may cover more than the current year. The majority of cases relate to taxpayers who have gone bankrupt or absconded."

The number of accounts written off totals 2,231 compared with 931 the previous year, but Civic Centre officials say that does not reflect the impact of present economic problems which have yet to filter through into the figures.

Coun Peter Allen, executive member for resources on the Liberal Democrat-run council, said: "We don't write off any debt unless it is impossible to recover.

"Our arrears position is no worse than anybody else's and probably a lot better than most." Coun Allen said the budget contains provision for bad debt, but added: "Nevertheless, it does put pressure on the budget because this is money that could be spent elsewhere."
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Publication:Evening Chronicle (Newcastle, England)
Date:Sep 25, 2008
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