Expert calls for radical new property levy
Former bank chief criticises bid to reform council tax
THE author of an independent report that said a radical levy based on property values should replace the council tax has stood by his findings as he predicted that the latest effort to reform regional taxation will result in a “sticking plaster” solution.
Sir Peter Burt, a former chief executive and governor of the Bank of Scotland, was tasked with leading an in depth review into local government finance by the last L a b ou r - le d Holyrood administration.
His proposals, which followed two years of work and included the recommendation that council tax is replaced by an annual levy of about one per cent of a home’s value, were rejected out of hand by then Labour First Minister Jack McConnell in 2006, before they were even published.
The latest attempt to reform the council tax, announced by Nicola Sturgeon, is currently ongoing with a commission set to report in the autumn so that its findings can inform manifestos heading into next year’s Holyrood election.
Sir Peter, whose conclusions were also dismissed by the SNP, Conservatives and the Liberal Democrats nine years ago but won praise from many experts in the
Under Sir Peter’s model which is more progressive than the current council tax system, those in a house worth £500,000 would pay £5,000 a year, although he recommended that a maximum rate be set. Currently, the maximum annual council tax bill is typically less than £2,500, with those on low and middle incomes paying proportionally more than the richest.
A deferral scheme was proposed for asset rich but cash poor households, meaning back taxes could be claimed when a property was sold.
He said he regards the fact that all four main parties rubbished his report as “a triumph” and a sign that it had been a good piece of work, while adding that his solution had probably been too radical for politicians who feared a backlash from the better off.
The former ITV chairman added: “No-one likes any change to tax because the people who lose out shout much louder than those who gain.
“Louis XIV’s finance minister said the art of tax was like plucking the goose – to obtain the largest possible amount of feathers with the smallest possible amount of hissing.
“The problem with council tax is that it’s a tax people see themselves paying. Most people, if you ask how much they earn, will think of how much is on their pay slip after
‘‘ No-one likes any change to tax because the people who lose out shout much louder than those who gain
National Insurance and income tax come off. VAT is hidden. But council tax you have to pay out and see it every month.”
Another key figure who worked on the 2006 report, the former Scotland Office official Kenneth McKay, has submitted evidence to the new commission in which he recommended that members read the Burt document and condemns the current council tax system as “unfair” and “regressive”.
He added: “It is a pity that the report was kicked into the long grass as soon as it was published, but, by the time it was issued, the 2007 Holyrood election was less than six months away and history demonstrates very clearly that local domestic taxation is a strong candidate for the too difficult box so far as political parties are concerned.”
The commission’s formal call for evidence has a deadline of Monday.
A short questionnaire as well as information over how to submit more detailed views is available at www.localtaxcommission.scot.