Cross party report support reform of local taxation system
THE COMMISSION on local tax reform, backed by Scotland’s main political parties, has called for an end to the current council tax system in favour of a new “progressive” alternative.
Releasing its final report after months of research and evidence gathering, the report stated: “The present council tax system must end.”
The current system, which has been criticised as regressive and centralised, has become “discredited”, according to the cross party coalition involved in creating the report.
The report’s authors, which included representatives from the SNP, Labour and Scottish Green Party, conclude that the need to reform local taxation following the Scottish 2016 elections “is an opportunity that must not be missed.”
“For too long, local government has been neglected and marginalised in debate about the democratic future of Scotland.” Andy Wightman
The council tax has been frozen since 2007, when the then minority SNP government proposed replacing council tax with a local income tax. The council tax itself was formed from the failed Thatcherite policy of the Poll Tax, which led to mass civil disobedience, non-payment of taxes and riots in London.
However, the tax has been left unreformed since 1993 – meaning that the valuation for rate payment is out of date and the system fails to reflect the ability of citizens to pay in its charging mechanism.
Andy Wightman, Scottish Green MSP candidate for Lothian in 2016 and a member of the Commission on Local Tax Reform, welcomed the report: “It is vital that the next parliament puts in place an enduring, stable and flexible fiscal framework for local government that provides fiscal autonomy and enhanced democracy.
“All political parties seek representation on local councils and all should have an interest in ensuring that they are able to offer genuine, costed choices to the electorate in 2017. The Scottish Green Party will consider the findings of the commission carefully and bring forward proposals in our manifesto for the 2016 Holyrood election.
“For too long, local government has been neglected and marginalised in debate about the democratic future of Scotland. The council tax freeze has cost over PS2.5 billion that could, instead, have been invested in public services.
“The freeze has, in addition, undermined local democracy by forcing councils between a rock and a hard place. This interference in local fiscal autonomy would be unconstitutional in countries such as Germany and must end.
“The recommendations of the commission are welcome. The onus is now on all political parties to work together to agree a programme of reform that puts local government taxation, funding and democratic freedoms on a new footing and allows local communities to have a far greater say in how local services are delivered and paid for.”
The Scottish Government has confirmed that it will set out proposals for reforming the council tax ahead of the next election.
“Our analysis therefore indicates that a more proportionate property tax, implemented alongside a more progressive system of income and need based reliefs, would be much fairer than the present council tax and connect better to both the income and the wealth interpretations of “ability to pay”.” Commission on local tax reform
Minister for Local Government Marco Biagi MSP, one of the commission’s co-chairs, said: “The First Minister established this commission to allow an informed debate on the future of local taxation.
“We welcome the fact that four of the five parties in the parliament have taken part and come to an agreement on a set of crucial principles – that local tax should be more progressive, broader and more empowering to local government.
“The Scottish Government has sought to mitigate the worst impacts of the council tax over the last eight years, with the council tax freeze benefitting average households by PS1,200.
“We will consider the findings of the report carefully and we will set out our detailed proposals for reform by the end of the parliamentary term, embodying the principles of the commission’s report.”
The report considered a local income tax (a flat additional rate to current income tax bands), a reformed council tax (with new bands and benefit support), and a progressive home valuation tax. Some work was also done on a land value tax.
The report also found that from considering 700,000 properties, 57 per cent would be in new council tax bands if they were re-valaued.
However, the report falls short of agreeing what tax system should replace the council tax or committing to raising income to protect public services from Westminster austerity.
The Liberal Democrats, who also contributed to the report, claimed it “was a missed opportunity to build cross-party consensus.”
A broad outline was agreed. The report stated: “Our analysis therefore indicates that a more proportionate property tax, implemented alongside a more progressive system of income and need based reliefs, would be much fairer than the present council tax and connect better to both the income and the wealth interpretations of “ability to pay”.”
Political parties are all now expected to propose changes to local taxation in 2016 Scottish election manifestos.
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