Does a local council have to be paid rates in euro? Or can they take payments in-kind

edzillion

Hi

I am just wondering, is there any law saying that a local council has to take payments in euros. What is to stop a council from setting up a complementary currency and taking payments in that?

I was looking about and I found

Local Government (Collection of Rates) Act, 1924

but it has nothing relevant. I need something higher level, like 'local govts can levy commercial rates with these restrictions...'.

The LOCAL GOVERNMENT ACT, 1941. section 60:

(1) A local authority by whom rates have been made for the service of a local financial year may from time to time, but not later than the expiration of the next local financial year, amend such rates so as to make them conform with the enactments relating thereto and in exercise of that power may, in particular, make any amendments rendered necessary by—

and

(5) A local authority shall make such refunds or give such credits (as the case may require) in respect of rates and shall be entitled to make such recoveries of rates as from time to time become appropriate in consequence of any amendments or appeals under this section.

Is this saying the council can change rates arbitrarily? That could mean that even if a council cannot take an alternative currency as a rates payment they could just take the payment anyway and amend the rate to reflect it being paid off. Then put the rate back up for the next year and do the same on the eve of every rates payment deadline.

Any ideas/thoughts?

antoinolachtnai

The problem wouldn't be legal. It would be accounting. The accounting officer would have to be able to stand over his valuation of the alternative currency. He would be open to challenge on this in an audit.

He would also have to encase the alternative currency into euros immediately. There would have to be a market for him to do this. If he held the alternative currency on the LA's balance sheet he would certainly face scrutiny.

If the LA used the alternative currency to price and pay for services and goods he would probably end up with a lot of procurement law problems.

edzillion

Thanks for the input.

Can a LA hold shares in a company? Perhaps it would be possible for the LA to hold shares equivalent to the outstanding credits of alt currency? I suppose then the issue would be the accountant standing over the valuation of the company? What if the company/investment vehicle was valued for cultural reasons? (might be hard to defend, but a local currency is definitely involved in local culture).

I guess I need to sit down and talk to someone who knows this stuff to figure out a way to do it. (What would you call someone like this? A consultant accountant?) I have found in the past that if you really look into a legal issue like this you can find a way. It would certainly make an interesting test case anyway, no? (IANAL)

antoinolachtnai

What would it do with these things once it had bought them? What is the point in having them if they have to sell them right away?

The alternative currency would also be instantly drawn firmly and painfully into the tax net the moment the local authority values the thing.

On the legal front, I think the government is committed under the EU treaties to using the Euro. However, the idea of a secondary currency is being considered for Greece.

http://www.reuters.com/article/2015/04/17/us-eurozone-greece-ecb-exclusive-idUSKBN0N824Y20150417

Secondary currencies are an interesting idea, but they are mostly irrelevant for open, trading economies like Ireland. Somewhere like pre-crisis Argentina (which for years had a 'pegged' currency which hampered internal growth and prosperity) is a much better case.

It is, generally speaking, crazy for a local authority to hold shares in a company. That is even worse than holding weird currency (which are basically loan notes).

The whole thing is a bit of a waste of effort really.

edzillion

'The whole thing is a bit of a waste of effort really.'

I get you, but I think we are coming from wildly different perspectives here.

Would you be able to tell me what kind of consultant would be able to help me with this though?

antoinolachtnai

I don't see any perspective from which an alternative currency is really worthwhile. It is ok for a while, then it dies. Currencies look simple, but they turn out to be really difficult.

If you want to do this with one local authority, you need someone who has the ear of the county manager. He is the person who has to be convinced.

edzillion

You misunderstand me.

I am asking you to tell me who I pay to get this kind of information. What kind of consultant would do this kind of legal/accountancy work?

antoinolachtnai

It could be a solicitor or an accountant with significant expertise in the area. One of the big-six accounting firms would be the first port of call I suppose. But if you don't have the ear of the county manager involved, you will get nowhere (and even if you do you'll probably get shut down by the Department).

edzillion

antoinolachtnai wrote: »

It could be a solicitor or an accountant with significant expertise in the area. One of the big-six accounting firms would be the first port of call I suppose. But if you don't have the ear of the county manager involved, you will get nowhere (and even if you do you'll probably get shut down by the Department).

cheers

Victor

What would the purpose of using a made-up currency be?

It sounds rather pie in the sky. Many such local currencies end up being fraudulent.

edzillion wrote: »

I am just wondering, is there any law saying that a local council has to take payments in euros.

It is usually the only thing the council will be willing to take. There will be a general (and probably some rather specific also) requirement ont he council to handle its finances properly and prudently.

What is to stop a council from setting up a complementary currency and taking payments in that?

The overhead. The risk of fraud. The professional derision it and its staff would be subjected to.

I was looking about and I found

Local Government (Collection of Rates) Act, 1924

but it has nothing relevant. I need something higher level, like 'local govts can levy commercial rates with these restrictions...'.

The LOCAL GOVERNMENT ACT, 1941. section 60:

(1) A local authority by whom rates have been made for the service of a local financial year may from time to time, but not later than the expiration of the next local financial year, amend such rates so as to make them conform with the enactments relating thereto and in exercise of that power may, in particular, make any amendments rendered necessary by—

and

(5) A local authority shall make such refunds or give such credits (as the case may require) in respect of rates and shall be entitled to make such recoveries of rates as from time to time become appropriate in consequence of any amendments or appeals under this section.

What does this have to do with alternative currencies?

Is this saying the council can change rates arbitrarily?

No, where are you pulling that from. The text doesn't say anything like that. All it says is that rates have to comply with the legislative regime and if they need to be amended, then they can. They can't be changed willy-nilly.

The second bit simply means that if the council owes money to someone due to over-payment, e.g. then an off-set can be made.

That could mean that even if a council cannot take an alternative currency as a rates payment they could just take the payment anyway and amend the rate to reflect it being paid off. Then put the rate back up for the next year and do the same on the eve of every rates payment deadline.

What?

Geniass

Victor wrote: »

What?

Not just me then.

Peregrinus

I think what he is asking is, can the council

(a) decide to accept Kenobian Wooden Dollars in payment of rates, as an alternative to Euros; and

(b) "amend" the rates of a ratepayer who has paid in Kenobian Wooden Dollars by issuing a credit so that the amount due is zero Euros.

I think the answer is "no". The power to amend the rate isn't a power to amend, say, edzillion's rates bill; it's a power to amend the rate generally, and then to isssue credits, or supplentary rate demands, to ratepayers who have already paid at the old rate, and who have therefore overpaid or underpaid by reference to the new rate.

As to the orginal question:

"What is to stop a council from setting up a complementary currency and taking payments in that?"

As others have pointed out it creates considerable accounting problems. But the main thing that stops them is that there is no conceivable reason why they would wish to do it, because no possible advantage accrues to the Council. And, from the legal point of view, while you might argue that it is within the power of a Council to do this, it doesn't follow that such a decision would be proper. The councillors have to act in the best interests of the local government concerned, and it's hard to see how it could possibly be in the best interests of the local government to write off debts due to the council in exchange for payments in Kenobian Wooden Dollars which, however ornamental they may be, cannot be used by the local government to discharge its own debts to employees, suppliers, contractors, creditors, etc.

edzillion

thanks Peregrinus, I appreciate your input

Do Councils/LAs compete on rates charges? I suppose these aren't very transparent so it is not something a company would care about?

On one level the plan I propose could be seen as a rates rebate. The council does not spend any of the alt currency itself, it gives it away. This giveaway has to be redeemed in the fiscal year so that the council will know how much it's take from rates will be: rates - rebates.

Peregrinus

edzillion wrote: »

thanks Peregrinus, I appreciate your input

Do Councils/LAs compete on rates charges? I suppose these aren't very transparent so it is not something a company would care about?

They're completely transparent. You can find out the rate set by any local authority in minutes, and the rateable valuation of any property is not that difficult to determine. I suppose their could be some degree of competition, with councils seeking to keep rates low in order to attract business to set up in commercial property in their district rather than the neighbouring one. But in reality the likely rates bill is going to be a small factor in determining whether you set up in, say, Tralee or Killarney. Plus, a council's priority may not be to attract new business so much as to provide residents with a high quality of services, and raise the revenue necessary to do that. So I doubt that competition is a big factor.

edzillion wrote: »

On one level the plan I propose could be seen as a rates rebate. The council does not spend any of the alt currency itself, it gives it away. This giveaway has to be redeemed in the fiscal year so that the council will know how much it's take from rates will be: rates - rebates.

An actual rates rebate would be much more straightforward, surely? If you link it to the tender of Kenobian Wooden Dollars, then businesses are put to the trouble of finding some Kenobian Wooden Dollars in order to get the benefit of the rates rebate, which will cost them something in time and money and will piss them off since it seems like pointless trouble and expense. And it seems to confer no advantage on the Council since they are just going to give the KWD away. And, either way, the loss of revenue to the Council is the same.

Victor

Peregrinus wrote: »

But in reality the likely rates bill is going to be a small factor in determining whether you set up in, say, Tralee or Killarney.

As town councils have been abolished, both of these are now covered by the same council - Kerry County Council.

edzillion

Peregrinus wrote: »

An actual rates rebate would be much more straightforward, surely? If you link it to the tender of Kenobian Wooden Dollars, then businesses are put to the trouble of finding some Kenobian Wooden Dollars in order to get the benefit of the rates rebate, which will cost them something in time and money and will piss them off since it seems like pointless trouble and expense. And it seems to confer no advantage on the Council since they are just going to give the KWD away. And, either way, the loss of revenue to the Council is the same.

The plan would be to introduce a local currency similar to (the very successful) Bristol Pound. Just looking at their website I notice that you can pay your council tax in Bristol Pounds!

The idea would be to stimulate the local consumer economy; every citizen gets an amount of free credits, given to them on a Friday (like fiver friday on liveline). The money can only be spent in local, privately owned shops & businesses; if the currency proves popular then each credit may facilitate more business than the cost of issuance (the loss of rates).

Graham

You're overcomplicating things describing the Bristol pound as a currency:

The Paper Bristol Pound is not legal tender and is legally considered to be a voucher.
Source: http://bristolpound.org/library/Download_docs/Bristol_Pound_Rules.pdf

Victor

edzillion wrote: »

The idea would be to stimulate the local consumer economy; every citizen gets an amount of free credits

You mean give people free money? Passing the cost from person A to person B (who might not be able to afford it)?

As I mentioned, these schemes usually fail when 'unofficial' sources start producing vast quantities of fraudulent 'currency'.

These do not stimulate local economies. They rip people off.

And you want the council to foot the bill, at a time when most councils are cutting employment, homeless services, etc.

antoinolachtnai

Well, one man's 'fraud' is another man's liquidity. It is very difficult to get a currency to 'float' properly on a small scale. It is worth reading about the Capitol Hill Babysitting Co-op.

https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op

However, I would say that the idea that a local authority could operate as a sort of central bank is one that it will be difficult to get acceptance for.

Carawaystick

The estate of Maggie Thatcher paid an inheritance tax bill of £1million with three notebooks

So the OP should chance his or her arm.