Council tax in Scotland needs shake-up to raise more cash claims think-tank

A radical shake-up of Scotland’s council tax system is needed if more money is to be raised by local authorities through the “unfair and out of date” system, according to a think-tank.

New research by IPPR Scotland claims that council tax in Scotlanddoesnotraiseasmuch moneyasitdoesinenglandand Wales, that home values are 30 years out of date, and low to middle-incomefamiliespaythe mostasaproportionofincome.

According to the thinktank,scotlandwouldhave£600 millionmoretospendeachyear if council tax matched bills in Wales and £900m a year if bills matched the average in England.

Russell Gunson, director of IPPR Scotland, said it was time political parties addressed the failing system, particularly as house prices increased by over 8 per cent in 2020andhigherincomehouseholds have seen their finances improveonaveragethroughthe pandemic.

Scrapping council tax was an election pledge made by the SNP in 2007, but instead it was frozen for ten years. After three years of councils being able to raise it within limits, the Scottish Government moved to freeze it again last month in return for a pledge of 3 per cent uplift in direct funding to local authorities.

Mr Gunson said radical reforms could include replacing council tax with a percentage of value tax, setting annual bills at 0.75 per cent of a home’s value, which would, over the long term, see higher value properties,andallpropertiesin Bands F-H, pay more than now.

Intheshortertermhesaidthe next Scottish Government could pledge to close the council tax income gap between Scotland and the rest of the Uk,increasebillsforhighervaluepropertiesmorequicklythan the rest to raise almost £400m a year by 2025/26 and take all families in poverty out of payingcounciltaxaltogetherbythe end of the Parliament.

Mr Gunson added: “We need totalkabouttaxinthiselection.

Whoever wins in May, it’s likely that taxes in Scotland will need to increase to help invest in the Covid recovery and build a fairer Scotland than went into the pandemic.

"With house prices increasing, benefiting the wealthiest the most, we think reform of council tax could be a fair and progressivepartofthesolution.

“Council tax is out of date and unfair. Lower income families currentlypaythehighestbillsas a proportion of their income. It also doesn’t raise enough money, with public services in Scotland losing out on hundreds of millions of pounds a year compared to money raised through counciltaxintherestoftheuk."

The report comes as new figures from Age Scotland

revealed older people in poverty and on low incomes missed out on £88 million in council tax reduction support last year.

The charity estimates 123,000 older households in Scotland are not claiming the Pension Credittheyareentitledtowhich would make them eligible for full council tax reduction.

Chief executive Brian Sloan said the reduction could “be making a real difference to the lives of those older people on low incomes, driving down levels of poverty and boosting their wellbeing". The charity has a helpline on 0800 12 44 222 for free eligibility checks.