Analysis: Rising Council Tax will be another squeeze on low-income Scots


Even increases in the most inexpensive Council Tax bands could threaten the financial stability of those living precariously, Sean Bell finds

COUNCIL TAX, infamously, doesn’t care how much – or little – money you make.

As a tax on domestic property, Council Tax – which replaced the Thatcherite Poll Tax following sustained public anger and protest – is based on property valuations, rather than income. More specifically, it’s based on property valuations last conducted in 1991, which you hardly need to be a housing market expert to know are now less than accurate.

While revaluations have occasionally been mooted, the long-standing suspicion has been that if Council Tax was adjusted to represent contemporary property valuations, there would be a lot of people suddenly paying significantly more than they are at present, and so are content to let sleeping dogs lie.

The Greens have long been the loudest and most consistent voices for local tax reform in Scottish politics, and after repeated threats that movement on the issue was necessary in order to secure their support for the minority SNP government’s Scottish budget last week, finally secured a partial victory – a commitment to convene cross-party talks on a Council Tax replacement, theoretically leading to the introduction of legislation before the end of this parliament.

READ MORE: Analysis: Have the Greens got enough bang for their buck with their #ScotBudget deal?

Given that this follows a 2015 cross-party commission which has already recommended replacing the Council Tax, there were many who wondered if further talks were necessary, or if the Greens’ support had been bought too cheaply. However, the agreement was consistent with the long-term view of Green co-convener Patrick Harvie, who told CommonSpace in March 2018 that a full replacement would “require time for consultation, legislation and implementation.”

The other key component of the Green deal was greater funding for local authorities, part of which will be delivered by lifting the prior 3 per cent cap on increasing to Council Tax and raising it to 4.79 per cent – a superficially modest proposal, which some have already argued will do little to ease local funding pressures.

The Scottish Tories – perhaps stung by Finance Secretary Derek Mackay’s mathematically accurate characterisation of their approach as “raise less, spend more” – made political hay about the prospect of a “tax hike”, but unsurprisingly, did not place the concerns of low-income Scots front and centre.

Meanwhile, the Greens did not spend much time justifying an increase in a tax they have repeatedly described as “regressive”. As one might expect from a left-wing party, when it comes to local taxation, the Greens’ focus has more often been on the wealthy not paying enough.

The overall result is that the concerns of the poorest, for whom the income-indifferent Council Tax can lead to financial struggle and escalating debt at the hands of notoriously unforgiving Sheriff Officers, have been once again left out of the political debate in Scotland. However, with rising Council Tax on the horizon, these concerns may become more pressing in the months ahead.

READ MORE: Threats, debt collectors and nervous terror: the reality of Council Tax in Scotland

Those on low incomes who have difficulty paying their Council Tax are usually pointed to Council Tax Reduction (CTR), a means-tested support system which can, in extreme circumstances, see your bill reduced.

And yet, as CommonSpace detailed in December last year, the number of claimants in September 2018 was 12.9 per cent lower – a record low of 71,280 claimants – than it was at the beginning of the scheme in April 2013, when it replaced Council Tax Benefit.

This seems at odds with the dramatic rise in the number of warrants issued in Scotland for non-payment of Council Tax, which the Scottish Government attributed to Tory welfare cuts. Put simply: it cannot simultaneously be the case that less people are in need of help paying their Council Tax, while more debtors are being pursued with threats of legal action – not unless a stealth campaign of Poll Tax-style non-payment has arisen without anyone noticing.

Speaking to CommonSpace this week, a Scottish Government spokesperson confirmed that almost half a million households in Scotland get some level of Council Tax Reduction, and on average recipients saved £685 per year.

“By the end of 2018-19 we will have provided more than £1.4 billion in CTR funding since 2013, and we plan to continue current funding levels under the scheme.”

READ MORE: Scottish Government blames Tory welfare cuts for 38% rise in Council Tax warrants over past 5 years

So in other words, while CTR recipients can expect a higher level of CTR support whenever a local authority chooses fo increase Council Tax, funding for financial support will remain frozen, despite the prospect of increasing bills in the years ahead.

Throughout the years when it was in force, the Council Tax freeze was often criticised as a policy that disproportionately benefited the middle-class, who could easily afford a moderate increase. However, these critics failed to answer, and in most cases even acknowledge, the unavoidable follow-up: if Council Tax increases, who will it disproportionately hurt?

Not the wealthy or the middle-class, but those who can barely afford to pay Council Tax as it stands, and whose precarious income is barely a factor in calculating how much they can pay.

Below, CommonSpace explores the potential strain that even the proposed 4.79 per cent increase could place on the finances of the least well-off.

Case study:

Based on current estimates, one person living in a single bedroom flat in Edinburgh, outside of the more expensive city centre, pays an average of £603.44 in rent and £652.09 in all other vital expenses (food, utilities, etc). If they’ve had the good luck to find a flat in Council Tax Band A, the least expensive available, they will also pay £93.12 per month. Therefore, in total, they pay £1348.65.

If this individual works 35 hours a week (the generally agreed-upon minimum of what a full-time job constitutes) and earns the recently updated Real Living Wage for Scotland (£9 per hour), then they make £1,365 a month – just under £17 more than what they need to pay all their vital expenses.

Should the City of Edinburgh Council take advantage of the new leeway allowed them in last week’s budget, that £17 would theoretically cover the extra £4.46 our case study individual would be required to pay.

However, it demonstrates how perilously close that individual would be to debt of one kind or another – particularly if the amount of hours they worked each week was subject to change, as in the case of zero hour contracts, or if they were to suffer a financial emergency.

Furthermore, someone living in the same area of Edinburgh, in a similarly sized flat and in the same building as our case study, but earning two, three or ten times as much as they do, would pay exactly the same.

Picture courtesy of Howard Lake