CommonSpace columnist James McEnaney says the Scottish Government has questions to answer on tax
AS was reported at the weekend by the Sunday Herald’s Paul Hutcheon, a storm is brewing over the Scottish Government’s newest revenue generation scheme.
On the face of it, the plan seems beautifully simple: end the council tax freeze, raise £100m in additional funds, and then spend it on education. That’s it.
Well, not quite ‘it’. Obviously some adjustments will be needed. Funds must be allocated on the basis of need rather than hoarded by the areas with the biggest houses, and some sort of formula will be required to calculate an equitable means of redistribution.
And the SNP will also have to hope that nobody remembers Nicola Sturgeon describing council tax as “fundamentally unfair” before reneging on her promise to abolish it – after all, attempting to use a “regressive” (her word, not mine) form of taxation as part of a crusade for equality would perhaps make the first minister look rather hypocritical.
The SNP will also have to hope that nobody remembers Nicola Sturgeon describing council tax as “fundamentally unfair”.
But, those issues aside, it all sounds straightforward enough. More money for schools is a good thing, so everyone should keep calm and fall in line, right?
Well actually, no, they shouldn't. In truth, concerns about these plans have been simmering – albeit largely in private – for some time. Now things have changed, with a leaked document showing that Cosla – the umbrella body representing the majority of Scottish councils – is far from keen on the proposals. So why would local authorities object to increasing spending on education by £100m across the country?
Much like the troubled Named Person scheme, the problem here lies in the execution rather than any ‘benign’ intentions.
On the face of it this may look like an innocuous, even innovative, means of raising much needed funds for education, and the government will – as ever – not be short of cheerleaders to deride those who questions their proposals. In a practical sense, however, what the government is actually planning is a blatant attack on a key principle of local democracy.
Here’s the situation: for nearly a decade the government effectively banned Scotland’s local authorities from increasing council tax, with serious repercussions threatened for any who refused to play ball. Though a few came close to defying John Swinney they all, in the end, did as they were told by the SNP.
To all intents and purposes central government simply annexed local government fundraising, a move which the SNP calculated would be politically beneficial. After all, who doesn't love a simplistic tax freeze?
To all intents and purposes central government simply annexed local government fundraising
Increasingly, however, the status quo became untenable as jobs were lost, services cut and, perhaps worst of all, it became clear that the richest benefited most from a blanket freeze. As soon as the SNP ditched plans to replace what it called the “hated council tax” with an alternative “based on ability to pay” it was obvious that something had to give.
So, earlier this year Nicola Sturgeon announced that her party would tinker with the upper council tax bands and allow the rates to increase, with these changes expected to raise £100m. Crucially, that money would then be confiscated (or stolen, if you prefer) by central government.
The problem is that there appears to be no mechanism by which these financial acrobatics could currently be achieved, especially with transfers between authorities needed to make the system equitable on a national scale. It therefore seems likely that the government will simply cut council budgets by £100m and then graciously permit local authorities to make up the shortfall.
Perversely, it looks as though councils will not necessarily see any financial benefit from the end of the council tax freeze, with central government instead reaping the rewards. In fact it seems that the only way in which more money can be made available to protect vital local services would be for local authorities to cut their education spending.
On this occasion, the gap between government rhetoric and practical reality is significant. Beneath the veneer of spin and PR it is not difficult to see that what the government is proposing is wrong.
If Nicola Sturgeon wishes to promise an extra £100m for education then she should at least have the decency, honesty and courage to raise that money herself.
Instead, having decided to maintain the council tax rather than replace it, and in a desperate attempt to avoid raising income tax on the highest earners, the first minister is now effectively marching councils to the cash machine with a knife at their backs.
New powers over income tax mean that the government cannot claim that its council tax raid is the only option available – it is simply a political choice, and it is the wrong one.
Check out what people are saying about how important CommonSpace is. Pledge your support today.