“I expect the parties to have strong local taxation positions in their forthcoming manifestos,” CIPFA Scotland head Don Peebles told Public Finance.
“Whichever government is elected, I’d like to think that one of the early bills they will be bringing forward will be the introduction of fairer local taxation, something that gives a stable and enduring settlement for local government and makes sure we can put to bed the regressive nature of the council tax for good.”
The Commission on Local Tax Reform, jointly chaired by Scottish local government minister Marco Biagi and Convention of Scottish Local Authorities president David O’Neill, called in its December report for an end to the council tax, and urged politicians to work constructively to agree a fairer, more progressive and transparent general tax to fund local services.
It did not commit to any single alternative, but canvassed the possibility of a hybrid that might combine a property-based levy with an element of income tax. It also saw merit in the principle, long popular with environmentalists, of land value taxation, but said the concept needed further work.
Peebles, who served on the commission, denied that the lack of a particular recommended system meant the issue had been fudged or parked. He agreed that the depth of evidence and breadth of views garnered by the commission have greatly raised its profile, and will oblige the parties to offer plans supported by proper evidence.
“When we were out at the public meetings, what caught me by surprise was the strength and depth of feeling about local taxation, and what local authorities actually do with the money people pay,” he said.
“I think there will be an expectation that the parties take up a position on local taxation.
“I think there’s going to be an impetus for change. There’s a recognition that the system is unfair, and I think we’ve brought that out further in the public domain.”
He also hopes the parties might now find it easier to re-examine entrenched policy positions, such as the Scottish National Party’s commitment to local income tax and Labour’s insistence solely on a property tax. CIPFA itself has long been committed to a property-based local tax system.
One barrier to reform has been the political toxicity of revising property values – last assessed more than 20 years ago – and major changes in household tax bills likely to result. The commission argued that a revaluation, while essential, might be phased in with transitional relief to ease the pain of adjustment.
“For the first time, we’ve recognised and quantified what the consequences are of revaluation,” Peebles said. “It’s going to be politically challenging to overcome that. We’re open and honest about that.”
