Reform of Local Taxation – Have Your Say
The Council Tax Freeze that has been in place since the first budget of the SNP Government has taken some of the sting out of the Council Tax. As this graph shows, under the previous Labour and Labour / Liberal Democrat governments, Council Tax was steadily increasing, sometimes well ahead of inflation. It took five years of the freeze to bring the level of Council Tax back into line with changes in the Retail Prices Index since 1997, and only this year was it restored to the equivalent of its value in 1997 against the UK Government’s preferred inflation index, the Consumers Price Index.
Even the Institute for Fiscal Studies criticises the Council Tax, describing it as regressive, even taking account of Council Tax Benefit.
“net Council Tax bills remain regressive across the whole of the income distribution”.(IFS, 2012)
The SNP has long believed in the need for a fairer system of local taxation in Scotland. In the 2007-2011 Parliament, the SNP Government tried to bring in a system of Local Income Tax (LIT), which would have seen the vast majority of households better off than under the Council Tax. As UK Chancellor, Gordon Brown scuppered that reform by threatening to withhold the £400 million spent by the UK Government in Scotland through Council Tax Benefit.
The Scottish Liberal Democrats supported the introduction of LIT, although there was disagreement between them and the Scottish Government on some aspects of the policy. Labour has had a number of attempts to develop a new local tax policy based on extending the number of Council Tax bands to generate additional income from high value properties.
The Greens have long supported the introduction of Land Value Taxation (LVT), which would see a tax levied on the unimproved value of land. Unlike the Council Tax, LVT would disregard the value of buildings, personal property, and other improvements to the land.
In its manifesto for the 2011 elections the SNP committed to consult on the design of a fairer system based on ability to pay to replace the Council Tax. The intention is to have a proposed new tax available to be put before voters at the election in 2016. In 2012, John Swinney set out the Scottish Government’s approach to taxation. The proposals he outlined were based on key principles derived from the work of Adam Smith; efficiency, convenience, certainty and being proportionate to the taxpayer’s ability to pay.
In order to implement its 2011 manifesto commitment, the Scottish Government has set up the Commission on Local Tax Reform. The Commission’s remit is to identify and examine fairer alternative systems of local taxation and to consider their impact on individuals and income inequalities. The Commission will look at alternative systems using domestic and international evidence on tax powers and wealth distribution, the autonomy and accountability of local government and the impact on individuals who pay the tax.
The Commission is co-chaired by the Minister for Local Government, Marco Biagi, and the President of COSLA, Cllr David O’Neill. It has representation from all political parties, with the exception of the Conservatives, as well as from the third sector and experts in finance and tax law.
Now, the Commission wants to hear from you. You can contibute by:
Filling in a brief online survey.
or, downloading a document, which will allow you to submit more detailed comments.
The Commission would like comments by 22 June 2015. If you want to submit comments, but want more time or further information, contact firstname.lastname@example.org