Poll tax bills in Oxford are finally to be written off.

More than 6,500 people in the city still owe a total of £1.3m of the community charge, introduced under Margaret Thatcher in 1990.

But the city council has decided it is no longer cost-effective to chase the arrears.

Tax collectors plan to gather a final £500,000 from defaulters this year and then use council cash to settle their account with the Government.

City council leader John Tanner said: "There comes a point, where it is not cost-effective to pursue the money. We hope this is the last gasp of the poll tax. I think we will all cheer very loudly and hope that such a blunder will never happen again."

Collecting poll tax arrears has proved an expensive headache for successive councils since the tax was scrapped in 1993. In 1994, more than 50,000 people owed a total of £10m and many of Oxford's 30,000 students were refusing to pay.

The cost of pursuing arrears and taking people to court has risen steadily and last year the council spent 41.5p on staff and legal costs for every £1 it collected. It was expected to rise to as much as 60p for every £1 collected this year.

The council has also been spending about £1m a year of its own cash reserves to pay off its debt to the Government.

Mr Tanner, who resisted paying the poll tax himself, added: "We have got our own collecting officer and we have continued to take people to court, but the longer time goes on, the more difficult it gets to track people down."

The £500,000 to be collected this year will be mainly from standing orders agreed with debtors in previous years.

Story date: Tuesday 09 March

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.