MSPs Must Collaborate to Reform Council Tax, SNP's Shirley-Anne Somerville Says
Politicians will need to collaborate if council tax reform is to be achieved, according to Shirley-Anne Somerville of the SNP.
Speaking on BBC Scotland's The Sunday Show, Somerville highlighted the complexity of the tax issue, noting that while there is universal agreement on the need for reform, there is no consensus within Holyrood on the specifics of such changes.
The SNP, which came to power nearly twenty years ago, initially pledged to abolish and replace council tax; however, subsequent modifications have fallen short of a comprehensive overhaul.
Council tax is a mandatory charge applied to properties, with rates determined individually by Scotland's 32 local authorities.
Councils are tasked with delivering public services including education, social care, planning, waste collection, and street lighting.
They also maintain additional services such as libraries and swimming pools.
Somerville remarked that the absence of agreement among MSPs at Holyrood has hindered the SNP's ability to introduce reforms since assuming power in 2007.
She emphasized that parliamentarians must rise to the challenge post-election and collaborate to devise a viable solution.
Despite recent increases, she maintained that council tax bills in Scotland remain lower than those in England.
Labour's Paul O'Kane advocated for broad reforms and stated that it is incumbent upon the Scottish Parliament to unite to find a resolution.
He recalled that two decades ago, the SNP promised to eliminate the "unfair" council tax.
Since then, council tax freezes have compounded issues while local government budgets have been reduced.
O'Kane added that this situation is unsustainable for the future of public services.
Council Tax System Described as 'Comically Broken'
Lib Dem Jamie Greene acknowledged that people are experiencing financial strain but expressed skepticism about achieving consensus in the forthcoming parliament.
"Of course, council tax needs to be reformed, of course, local government has to be funded properly, and we need to do what we can to bring people's monthly bills down... [but] I struggle to see where there would be consensus."
He suggested that the next government should commission independent research on alternatives to council tax, removing political influence to develop sensible solutions.
Scottish Greens co-leader Ross Greer characterized the council tax system as "comically broken."
"Poorer households were paying more than they should, while the richest were getting off with a 'steal' from the broken system."
Greer also advocated for higher payments from owners of the largest and most valuable homes, citing fairness.
The Scottish Conservatives committed to reducing taxes and the benefits bill.
Craig Hoy stated their intention to simplify the tax system to increase disposable income, specifically by raising the personal allowance and the upper tax threshold.
Hoy attributed the fundamental problem to SNP-induced real-terms cuts in local council budgets, despite budget increases allocated to the Scottish government from Westminster.
Approximately 80% of council budgets are funded by Holyrood.
He noted that while budgets are being reduced in real terms, councils face increased responsibilities.
His party advocates for a fair funding formula for local councils based on allocations from Westminster.
Malcolm Offord, leader of Reform UK in Scotland, argued that taxation levels are excessively high and proposed tax breaks for all.
He also stated that councils have been deprived of adequate funding.
The party's manifesto pledges to "immediately cancel the planned increase in council tax."
It critiques additional tax bands labeled as a "mansion tax," describing them as effectively a "terrace tax."
The manifesto asserts that these additional bands would disproportionately affect working families with mortgages and pensioners residing in their long-term homes.
It further clarifies that the so-called "mansions" are often semi-detached and terraced houses in Scotland's urban areas.
Sources of Council Funding
Approximately 60% of a council's general funding is provided through grants from the Scottish government.
Another 20% derives from business premises taxes, known as non-domestic rates.
The remaining 20% is raised via council tax, paid by both homeowners and renters.
According to the Accounts Commission, council funding from the Scottish government has increased steadily in cash terms over the past seven years.
However, when adjusted for inflation, real-term growth has been minimal.
Over the next three years, local authorities' total settlements are expected to remain static, representing a real-terms funding reduction of 3.8%.
The Convention of Scottish Local Authorities (Cosla), representing councils, has described the medium-term financial outlook as "deeply concerning," calling for transparency regarding funding, priorities, and local autonomy.
Authorities face growing demands, especially in health and social care services for Scotland's ageing population, with rising associated costs.
Nationally negotiated pay agreements for teachers and other council employees, along with policies such as free school meals and expanded free childcare, further strain budgets.
Councils frequently express frustration that significant portions of their budgets are ring-fenced to implement Scottish government policies, limiting their ability to address local priorities.
The most recent Scottish budget introduced the possibility of additional council tax bands for properties valued over £1 million, though these would not be implemented for several years and are projected to generate approximately £14 million across Scotland.
Consequently, councils often resort to savings, increasing council tax, or reducing services to balance budgets. Some are also considering introducing a tourist tax on visitors.
Challenges in Reforming Council Tax
Few in local government claim that council tax is an ideal mechanism for funding local services.
The question remains whether it is the "least worst" option or if a better alternative exists.
Council tax typically constitutes less than 20% of a council's budget, with the majority funded by the Scottish government and business rates.
Introduced by John Major's government, council tax replaced the community charge or poll tax—a flat-rate charge where all non-discounted individuals paid the same amount regardless of income or assets.
The poll tax was widely unpopular across Britain, particularly in Scotland, where it was introduced first.
Some argue that its unpopularity contributed significantly to the establishment of the Scottish Parliament.
However, if both the community charge and council tax have been described as "hated" and "controversial," questions arise about the tax they replaced.
Domestic rates were also unpopular, and a contentious revaluation in the mid-1980s led to the introduction of the poll tax.
While the poll tax was politically contentious and ultimately regarded as a major miscalculation by Margaret Thatcher's government, some supporters at the time believed it offered improvements.
The debate continues on whether council tax can now be replaced.
About ten years ago, the Scottish government established a commission to explore alternatives.
The commission outlined several options, assessing their advantages and disadvantages, but did not endorse a specific alternative.
A local income tax, for example, might be considered the fairest system as it aligns with an individual's ability to pay.
However, varying income tax rates across council areas could pose administrative challenges.
Conversely, raising income tax uniformly across Scotland to fund councils would sever the link between local voters and the services they finance.
Each method of raising council funds presents trade-offs regarding fairness, public comprehension, and practicality.
Any change would likely result in some individuals being financially better or worse off initially.
Without broad support for an alternative, a complete replacement of council tax appears unlikely.
Politicians are wary of repeating the Conservative Party's late-1980s error of replacing one unpopular tax with another even less accepted.
