By Mark Smulian
Council tax benefit is so complex that it deters people on low incomes from seeking work, the Joseph Rowntree Foundation has claimed.
Although it makes no suggestions as to how, it criticises how the benefit is only available for those on very low incomes, so most lose it when they start working.
Many reformers have emphasised the problems of people on low incomes - typically pensioners - who face high bills because their homes are in the upper rating bands. But the foundation's study finds there are only 181,000 such households, against 5.7m poorer people in the lowest three bands.
Too little attention has been paid to the tax's effects on people on low incomes who live in low-value homes, where some two million people struggle to pay the tax, it says. Council tax accounts for the equivalent of 4.9% of the lowest incomes, against just 1.7% for the wealthiest payers, it adds.
Michael Orton, of Warwick University's Institute for Employment Research, who conducted the study, interviewed payers who complained that council tax benefit was inadequate, bafflingly complex and clashed with other allowances so that they were worse off if they sought work.
One care worker interviewed said: 'I just feel the government [is] encouraging you on the one hand to go to work and to earn money, but then what they are giving you in tax credits, they are taking straight back off you in council tax and full rent.'
Local Government Association chairman Lord Bruce-Lockhart (Con) said councils were 'doing everything' to keep council tax down.
But he said this year's settlement from the government had 'included no funding for demographic change such as the increasing number of vulnerable elderly people requiring care'.
Stuart Adam, senior research economist at the Institute for Fiscal Studies, said: 'Council tax is regressive but it looks a lot less regressive when you include council tax benefit. But that is complex and people fall through the cracks.'