Council tax reform is a 'major undertaking'

An international study undertaken by academics at the University of Glasgow has concluded there is no “silver bullet” for reforming local taxation.

The review of local government funding around the world was carried out by Professor Kenneth Gibb on behalf of the Commission on Local Tax Reform, which was established jointly by the Scottish Government and the Convention of Scottish Local Authorities (COSLA).

It found the present council tax has had “in-built” problems from day one but the “unwillingness” to revalue and modify the system has stored up even greater problems for today’s policy makers.

RELATED CONTENT

Public to be consulted on planned changes to council ward boundaries 

Heathrow expansion more popular among SNP MPs than rest of House 

The study said: “It is clear there is no magic bullet, and past experience from the UK and across the world shows that reform is always going to be difficult and will inevitably be bound up with the previous experiences and traumas of past reform.

“So whilst the current council tax has many acknowledged deficiencies, change and reform is a major undertaking.”

Gibb examined different systems of local taxation from around the world and their potential impact on the remit of the commission’s work.

The report also considered in greater detail a number of local tax systems across the UK, Europe, North America and Australia.

The review said there is academic consensus that property tax is a “good” local tax because it is stable, difficult to avoid, and can have desirable impacts on housing markets but it can be unpopular with the public because it is so visible, and because it is not directly linked to current income.

It also found local income tax is also used in many countries around the world, and because it is levied on current income it is often thought to be fairer.

However, it can create problems for local authorities which struggle to cope with fluctuating income streams and often there is little flexibility to vary rates locally to fund local priorities.

Gibb said: “The UK is distinctive in terms of its approach to these matters but there are insights from abroad that can nonetheless inform the commission.  

“We therefore hope that this paper helps shape the debate on the work that the commission is engaged in.”

Minister for Local Government and Community Empowerment and co-chairman of the commission, Marco Biagi, added: “We can clearly see that we are not alone in facing these challenges and there is no perfect ready-made solution out there.

“This adds to the importance of our work that will allow everyone to understand what any alternative local taxation systems would mean to the people of Scotland.”

The commission will now hold a public consultation across Scotland before publishing its report in the autumn.