Announcing a last-minute agreement with the Scottish Greens that is expected to see the minority government’s budget pass all three parliamentary stages, finance secretary Derek Mackay also committed to cross-party talks which could see the end of the council tax north of the border.
Legislation to replace the council tax will be introduced by the end of this parliament if agreement is reached between the parties at Holyrood, he said.
Mackay also used the stage one debate on the draft budget to announce a £90m boost to the core local government budget, and an increase in next year’s council tax cap from 3% to 4.79%. The enhanced package meant councils could benefit from an additional £187m next year, he said.
However, it is the commitment to legislate for a local tourist tax, following a consultation on the principles of the levy, which is the most symbolic concession within the budget deal.
Although the Scottish Government has long opposed the introduction of a charge on visitors, it recently showed signs of becoming more open-minded to the proposal in the face of strenuous campaigning by local authorities.
Councils are also to be given the power to levy a charge on workplace car parking, with the exception of hospitals, as well as control over empty property rates relief in time for the next business rates revaluation.
“In each of those cases, it will be for local authorities, having taken account of local circumstances, the views of business and the electorate, to decide whether to use the powers,” said Mackay.
He also announced that councils would benefit from three-year funding settlements from the 2020-21 budget onwards, and have greater flexibility to offset adult social care contributions. A “rules-based framework” for local government funding would be developed in partnership with local authorities, he added.
“The Scottish Government has continued to ensure our partners in local government receive a fair funding settlement despite further cuts to the Scottish budget from the UK Government,” said Mackay.
“These additional measures will deliver the most significant empowerment of local authorities since devolution and provide additional funding to support local services.”
Patrick Harvie, co-convener of the Scottish Greens, whose six MSPs had made their support for the draft budget conditional on local tax reform, said the commitment to replace council tax and to give local authorities further tax-raising powers was “a historic victory”.
“All parties now have an opportunity to help bring about a fairer system of funding essential local services,” he said.
Alison Evison, president of the Convention of Scottish Local Authorities, welcomed the Scottish Government’s commitment to the introduction of levies on tourism and workplace parking.
“It is right that local authorities across Scotland should be able to raise revenue locally to address local issues,” she said.
While councils would continue to face financial challenges, they were “in a better place” than they had been under the original budget proposal, said Evison.
Adam McVey, leader of City of Edinburgh Council, which has been spearheading calls for a local tourist tax, said the Scottish capital could now become the first area of the UK to introduce the scheme.
“I welcome today’s announcement by the finance minister, which paves the way for a transient visitor levy in Edinburgh and pays testament to the strength of the case we have developed,” he said.
