In the run-up to the Council elections in Scotland in May, can I suggest that the Liberal Democrats offer voters a real solution to the shortfall in Council budgets which has had such a devastating effect on local services.
We should be campaigning for a realignment of the council tax bands to bring them into line with the market value of houses and asking people in all bands, except the lowest, to pay more. This would be a relatively simple and fair way to raise the extra £250m the Councils say they need just to keep services as they are.
Before the Scottish Government published its budget, COSLA the local councils umbrella organisation, called for an increase in their funding by £1bn, just to stand still, and preferably a £1.6bn increase to “thrive.” The budget did indeed give them an extra £1bn, or a 6 per cent increase, but it did not include money for wage increases or increases in National Insurance or the increasing demand for services (eg home care). It left them £370m short.
Last month, in the final budget statement, the finance secretary Kate Forbes, found an extra £120m. She suggested this was equivalent of a 4 per cent rise in council tax, hinting there was no need for councils to increase taxes in an election year. This is an attempt to go back to the old SNP policy of freezing council tax which has led to years of unnecessary austerity in local services.
So I’m proposing that the freeze be ended and Scotland catch up with local tax rises in England, which, according to the Fraser of Allander Institute, would yield £900m in added revenue, if we were to level up.
But the way to spread the tax burden is important, especially when you consider the increases in poverty over recent years. To do this, I’m suggesting that the eight bands in the current property valuation system be readjusted to reflect the real spread in property prices. The Commission on Local Tax in 2015 found that “people in the most expensive homes pay no more than three times the tax than those in the lowest value homes, even though we estimate those homes on average are worth around fifteen times as much.”
A revaluation of property prices need not be complicated or controversial. The value of a house can be found simply by looking at the Land Register records of house sales over, say, the last three years, in any particular neighbourhood. The local council could zone its various housing areas and ask the Land Register computer to work out the average value of properties in that area.
Then I would suggest that people in the lowest value properties pay the same as they do now (and there’s already council tax relief for 500,000 of the poorest households) but people in all other bands pay according to the readjusted value of their homes. The councils could then work out how much they need to raise council tax to yield the extra £250m needed this year.
There will be people who point to the famous “poor widow”, still living in the large family home on a small state pension. First, I wonder exactly how many there are and then I wonder why they are not already eligible for tax relief. And then I wonder why she couldn’t re-mortage the home or make an arrangement with the council so it collects her council tax from her estate when she dies.
The plain fact is that we are not paying enough in local tax and people living in expensive houses are not paying their fair share. And it’s leaving local services whittled away, care homes and care packages under-funded (leading to bed-blocking in hospitals), schools not fully staffed, sport and leisure facilities rotting away and pot-holes in the roads.
Please, can the Liberal Democrats be the party that offers an honest analysis of the problems in local government and suggests a fair solution.
* John Knox is a member of Edinburgh South Liberal Democrats, a retired journalist and a recent council candidate.
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8 Comments
Parties that are serious about providing decent services to our communities both large and small, should be campaigning to ABOLISH the Council Tax, that mongrel left over from the wreckage of the Poll Tax, cobbled together seemingly on the back of an envelope and, in England at least, still based on property values from the early 1990s. What you replace it with is where we have allowed ourselves, rather like in our arguments about the merits of the various forms of PR, to be continually sidetracked.
‘Experts’ such as Joseph Bourke will tell you that the answer is Land Value Tax, something that has been around when my grandfather knew Lloyd George (actually it was Ramsay MacDonald). I still go with the 1976 Layfield Report that came down in favour of Local Income Tax. I don’t really want to start this particular hare running again so all I would say is that we are just not paying enough for our services, or rather, too much of what we pay in taxes etc is getting sucked into the Treasury’s black hole and not enough is coming back. So, come on Rishi, let’s have a bit more REAL levelling up and let’s have a system of local government that is democratically accountable and with real powers to deliver.
Devolution, that’s the name of the game. We should all be playing it!
As it happens, local councils do not have the power to target any Council Tax increases at those properties in higher bands – the ratio of the different bands to one another is set in law and all councils can do is set the Council Tax level for Band D and the tax payable by all other bands is worked out automatically. Therefore if the Liberal Democrats wish to lose the party’s remaining 4 MSPs next Scottish Election, they should both make the pledge to massively increase Council Taxes a manifesto pledge and also publicise their proposals to the fullest extent possible .
I wonder how much of the powers required to implement a Proportional Property Tax fall within the powers of the Scottish Government?
They certainly control the rate of Stamp Duty (renamed to LBTT).
@Matt Wardman
The Scottish Parliament has full power to amend current or introduce new forms of local income tax. It does not have the power to create new forms of national taxation. Therefore Council Tax could be changed significantly or even abolished and a replacement form of local taxation introduced. The SNP has decided that trying to make such a change would come at too great a political cost – perhaps the Liberal Democrats should seize the opportunity to propose the radical change needed.
@John Marriott
“we are just not paying enough for our services, or rather, too much of what we pay in taxes etc is getting sucked into the Treasury’s black hole and not enough is coming back.”
Seconded. we are just not paying enough for our services, or rather, too much of what we pay in taxes etc is getting sucked into the Treasury’s black hole and not enough is coming back.
Sconded. Especially the black hole issue.
I wonder what local authorities could have done with all those billions wasted on unused and useless PPE? Yes – a one-off maybe but who’s to say there won’t be similar central government waste on something else in the future…?
Sorry – that post became a mess – if only I could edit it during the first minute after posting it!
Why be so scared of Local Income Tax!
The biggest cause of disproportionate tax burden on lower income families is Council Tax. Replacing it with LIT would be a big step forward.
If I am correct the failure to agree with the Nats to LIT in Scotland after the 2008(?) Holyrood elections was a deal breaker.
In England in the 2005 GE the Tories fought a viscous anti LIT scare campaign, highlighting its weaknesses to wealthier voters.
If these weak areas can be addressed, ie tapering or similar, possibly LVT in the mix, we should have a practical and popular proposal to include in our next manifesto.
Like so many of our radical policies, these were dropped by the Orange Bookers when they took over.
@Andy Hyde – “Why be so scared of Local Income Tax!”
Not scared of it, just see it as pointless.
What is needed is better national redistribution, which largely bypasses Westminster and so is less subject to (party) political interference…