Scottish Labour announces proposals for council tax replacement

Scottish Labour has announced its plan to replace council tax with a new national system based on property value. 

The current council tax bands would be scrapped and replaced with two levels of property tax that would work in a similar way to income tax bands.

For properties valued at up to £180,000 the tax would be a flat rate of £450 plus 0.35 per cent of value of the property.

For properties worth more £180,000 there would be the same flat rate of £450 plus 0.35 per cent on the first £180,000, then a rate of 0.9 per cent of the value above £180,000.

The maximum charge would be capped at £3,000 in the first year.

After that local authorities could adjust the levels based on local house price increases to increase the amount raised up to a maximum three per cent increase on any household’s bill per year.

Labour estimates that 80 per cent of households – nearly two million – would pay less than they do now, based on figures calculated by the Commission on Local Tax Reform.

Scottish Labour is also proposing to revalue all of Scotland’s property so that households are charged based on their present value.

The property values on which council tax is based were set it 1991 and have not been updated since.

Analysis from Heriot Watt University for the Commission on Local Tax Reform found that the current system places 57 per cent of properties in the wrong band, of which 28 per cent of households should pay less and 29 per cent should pay more.

The current system of discounts, rebates and exemptions would continue to apply.

In addition to the reformed property tax, Scottish Labour proposes to give councils the power to charge a tourist tax, a land value tax on vacant and derelict land and to devolve the surplus from Crown Estates to local government.

Scottish Labour leader Kezia Dugdale said: “Nicola Sturgeon was elected and re-elected on promise to scrap the council tax.  After a decade in power and with a majority in Parliament she now wants to keep the council tax instead.

“After ten wasted years and hundreds of millions of pounds of cuts to local services that simply isn’t good enough. 

“Labour will make good on the SNP's broken promise and scrap the council tax. We will fix the funding of local services for good. It’s a fair plan which means millions will pay less and those who can afford to will pay a little more.”

Scottish Conservative leader Ruth Davidson criticised the plans to raise local taxes for some households, saying Labour would "tax Scotland back to the 1970s”.

“Going into this election, we have a government promising to put up taxes and a main opposition party saying taxpayers should be hammered even harder.

“Only we are standing up for Scotland's workers and saying on a point of principle you should not have to pay more in Scotland than you do in the rest of the UK,” she said.

Davidson also confirmed the party's policy on council tax: “We support the recommendations of our tax commission in January which backed a reformed council tax with a three per cent cap on increases from next year to protect households.”

The Scottish Greens, who are to publish their proposals for local taxation next week, welcomed Labour’s contribution, but criticised the caps.

Their local government spokesperson, Andy Wightman, said: "While we welcome Labour’s contribution to the debate on how to replace the discredited council tax, we question their £3,000 cap for owners of high value properties.

“It's also concerning to see Labour proposing to cap the powers of councils to set the rate of property tax when what councils need is greater fiscal freedom to strengthen local democracy and accountability.”