THE STEALTH MANSION TAX
Middle-class families face punishing new levy on their homes
FAMILIES living in expensive homes in Scottish cities face a punishing ‘mansion tax’ under plans being put to the Scottish Government. Local authority bosses want emergency powers to hammer wealthy homeowners after being hit with a huge budget cut by Finance Secretary John Swinney.
Significantly, the SNP group leader on the City of Edinburgh Council yesterday backed the idea, which could see council tax bands ‘decoupled’ so larger levies can be introduced for expensive properties.
An alternative option would be to create two higher-rate bands and a new lowerrate band for people living in poorer areas.
The Scottish Daily Mail understands that a sudden overhaul has been privately discussed and backed by bosses at Scotland’s seven city councils: Edinburgh, Glasgow, Aberdeen, Dundee, Inverness, Perth and Kinross and Stirling.
Any changes could be introduced as soon as 2017 as a short-term measure until council tax is abolished several years later. A senior local government source insisted
that councils are confident of persuading the Government to act after May’s election, through a simple change to the existing ‘statutory instrument’.
Edinburgh and other cities would then be able to act immediately, although all 32 councils across Scotland would be free to make similar changes.
The Mail revealed last year that Government officials were examining a nearidentical idea as a long-term solution, meaning chances of SNP action are high.
The Scottish Cities Alliance is now demanding the ‘freedom to raise local taxes’, while a spokesman for the umbrella body that represents most of Scotland’s 32 local authorities, Cosla, said last night: ‘This absolutely chimes with our position of wanting more local democracy and flexibility around decision making.’
In a recent report on council tax levels, the Centre for Economics and Business Research suggested those living in the largest homes should pay around £1,500 more every year than the band H level.
Two higher-rate bands – I and J – could see some families issued with bills up to three times the size of the band D average. The current band D average is £1,149, and although the monetary value differs across the country, those in band H homes must pay 200 per cent of the band D average, while band A homes are charged twothirds of band D average.
Scrapping that rule by ‘decoupling’ the rates could allow steep increases at the top end of the scale.
Edinburgh councillor Sandy Howat, SNP group leader in the Labour/SNP coalition that runs the capital, said: ‘It will take too long to look at how we redo the whole package of local government taxation. What we need is an interim step where we can do something with the present tax system to give it more flexibility – that is, decouple the bands, or something as simple as that, which might give us an opportunity not just to have a uniform blanket rise but to tweak it somewhat.
‘That could be enacted quite quickly. I am optimistic that we will have a quicker reform rather than a slow revolution.’ He admitted that the plan could mean greater taxes for higher band homes.
Latest figures show that 12,579 of Scotland’s 2.4million properties are in band H. In Aberdeen, the highest charge is £2,461, while in Edinburgh, which has nearly 4,000 band H homes, it is £2,338.
The recent Commission on Local Tax Reform concluded that council tax must be abolished. But an alternative system – a new property tax, a land value tax, or a local income tax – is likely to take several years to implement.
Scottish Conservative finance spokesman Murdo Fraser said: ‘Not everyone living in a larger property has the disposable income to pay higher taxes for no better services. There will be many pensioners living in their family homes in Edinburgh deeply worried by these plans.’
A Scottish Government spokesman said: ‘We established the Commission on Local Tax Reform, jointly with Cosla, to allow an informed debate on the future of local taxation. Before the end of the parliamentary term, the Scottish Government will bring forward a detailed plan for reform of the present council tax, which will embody the principles of the report.’
‘Many pensioners will be worried’