Council tax replacement ‘not feasible’ SNP warned

THE Scottish Government is coming under pressure to abolish council tax and replace it with an alternative system that even its own experts warn might not be feasible.

The Scottish Greens will demand an overhaul of local taxation in return for supporting the minority SNP Government’s Budget.

Their preferred alternative is a Land Value Tax (LVT), which could see some bills soar by almost £4,000.

But research carried out for the Scottish Land Commission (SLC) has cast serious doubts over whether such a scheme is viable.

LVT could lead to some households ultimately paying £3,855 a year more, according to the Scottish Greens’ own analysis, although others could see their bills fall.

Homeowners would be taxed on the ‘unimproved’ value of the land their property is on, as opposed to the council tax group it falls into.

While council tax is based on property values, LVT is based on the value of the land, so the value of houses would not be taken into account.

The land commission was asked to investigate whether LVT could be introduced in Scotland. Experts from Reading University concluded that while LVT is ‘attractive in theory’, it would face ‘a number of barriers’.

The researchers looked at Australia, Estonia, New Zealand, Denmark and South Africa, but the only country that bolstered the case for LVT in Scotland was Namibia.

While the Scottish Greens support LVT in the long term, a spokesman said it would be open to other alternatives which are ‘fairer and modern’.

The current system is based on property values from 1991. The SNP has twice promised to overhaul council tax – in its 2007 and 2011 manifestos. However, when Nicola Sturgeon finally unveiled changes, she chose to keep the system.

She then ended the council tax freeze, allowing local authorities to hike bills by up to 3 per cent a year.

In his draft Budget this week, Finance Secretary Derek Mackay refused to pass on income tax breaks announced by Chancellor Philip Hammond for workers south of the Border, leaving many Scots £1,500 a year worse off.

Last night, Scottish Conservative finance spokesman Murdo Fraser said: ‘Rather than focus on economic growth, the SNP and Greens are keen to find more ways to clobber hardworking taxpayers.

‘The SNP and the Greens must listen to the majority of Scots, and the experts, and dump the new tax.’

John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘This Christmas, wealthy Holyrood politicians should spare a thought for all those Scots who are struggling with the cost of living and really can’t afford to have their incomes squeezed even more by the Government.’

However, the Greens insisted the report was a positive step. Local government spokesman Andy Wightman said: ‘It’s good to see this longstanding Scottish Greens policy being actively considered.’

The SLC now plans to carry out further investigation of LVT.

‘More ways to clobber hard-working taxpayers’