SNP council tax plans ‘still regressive’

The SNP’s plans to change the council tax in the next parliament are still regressive, according to Scottish Parliament researchers.

The Scottish Parliament Information Centre (SPICe) compared the Scottish Government’s plans with the findings of the Commission for Local Tax Reform, which recommended that council tax on the highest value homes would need to be 15 times the tax on the lowest value homes to achieve proportionality.

“While the Government’s proposals make the Council Tax more proportionate than the present system, they fall short of making the Council Tax a ‘proportionate’ tax,” SPICe said.

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“Therefore, if the reformed Council Tax is not ‘progressive’, or even ‘proportionate’, then even if the proposed changes make it less regressive, then it would still be termed ‘regressive’ using this methodology,” it concluded.

The Scottish Government is proposing to leave bands A-D at the current level, while raising bands E-H. Band E will increase by 7.5 per cent, band F by 12.5 per cent, band G by 17.5 per cent and band H by 22.5 per cent.

This makes the ratio from the highest to the lowest property bands just 3.7, only a slight increase from the current ratio of three.

The Commission of Local Tax Reform had modelled proportional proposals for a possible council tax replacement which would have seen properties in the lowest bands pay less than they do now and the higher bands pay much more.

The Scottish Government is not proposing to revalue properties, so houses would remain in their current bands, which are based on 1991 property values.

Other issues raised by the SPICe report are that the revenue generated by the increase would vary considerably from council to council because of the distribution of higher bands in different areas, the lack of detail around implementation or costs of the targeted relief for households in bands E-H with income of less than £25,000 per year and how the Scottish Government would fulfil its promise that the increase will be invested in education when there is no mechanism to ring-fence council tax for specific purposes.

SPICe also notes that the Scottish Government has promised to cap future council tax increases at three per cent a year, but “it is not clear how this will be enforced”.