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Council Tax Multipliers Consultation

Overview —

A response to the Scottish Government’s consultation on increasing the rate of Council Tax in its upper bands.

Credits—

Common Weal

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Common Weal is disappointed that the Scottish Government has once again decided to tackle the problem of Council Tax in Scotland by not tackling it. The proposals here seem
to be a response to an acute crisis – perhaps one of PR and media attention – rather than a desire to fix a system of tax that was known to be broken when it was introduced as a
minimal replacement to the Poll Tax in the early 1990s and remains broken more than a third of a century on.

In 2021 Common Weal published our alternative proposal, A Property Tax for Scotland, which envisaged replacing Council Tax entirely with a tax based on the present value of a
home. We calculated then that if current rebates were applied such as the single occupant discount then a tax rate of 0.63% would be “revenue neutral” compared to Council Tax,
although we would expect Local Authorities to have full control of their central rate and any discounts or surcharges they may wish to apply. We calculated that this would result
in around 60% of homes in Scotland experiencing a tax cut and most of those who do not would receive only a modest tax rise (the largest tax rises would be applied to extremely valuable mansions, estates and castles where current Council Tax badly undercharges their value even in Band H). We have roughly estimated that house price rises across Scotland
since 2021 may mean that the 0.63% revenue neutral rate set then would bring in around £400 million in additional revenue based on house prices in 2023 compared to Council Tax (or, in practice, it may have helped suppress the price increase and helped to keep homes less unaffordable). We also proposed that the Property Tax would be applied to land  (Council Tax only applies to land considered part of the “curtilage” of a house, not a broader estate or other landholding) which could represent another several hundred million pounds per year in additional revenue.

The Scottish Government promised in 2021 that they would run a Citizens’ Assembly on local government finance and Council Tax reform before the end of the current Parliament. This promise has been used to block calls for local finance reform on the grounds that it would pre-empt the Assembly.

However, there have been no recent announcements on the progress of the promised Assembly with little time remaining to organise and hold the Assembly and report back on its findings before the deadline of the 2026 Scottish Parliamentary elections. We are forced to ask if this proposal to change Council Tax is a tacit admission that the promise to hold the Assembly is to be broken? We are deeply concerned that these proposals being consulted on will become the new excuse to not properly reform Council Tax on the grounds that another change soon after this one would be too politically costly.

To be clear, we do support property taxes becoming more progressive so we should, on the face of the proposal, be natural allies. However the specific proposal does not address badly needed fundamental reforms, is based on breaching principles of subsidiarity and local government autonomy and threatens to break previously made promises about the role of citizens in policy-making.

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