A replacement for the council tax, wiping away bands based on house values for a simplified system based largely on land values, would save low-income families hundreds of pounds a year while retaining local accountability, according to new proposals by Scotland's largest local authority.
Glasgow City Council is to float the idea of a "hybrid" tax similar to that used in Pittsburgh and New Hampshire, US, Sydney, Australia and parts of Denmark in a report to be published next week, and has already carried out a pilot study in the east end of the city.
It includes new evaluations for domestic properties as well as the value of the land they sit on, although water charges would be kept separate in the proposal, and the document claims it provides a fairer alternative to both council tax and the mooted replacement, Local Income Tax (LIT).
Significantly, the authors claim that such a system would retain local accountability, with local taxation paying for local services, something they insist would disappear under LIT. But the city's opposition SNP group has claimed that most people, currently on middle council tax bands, would lose out financially.
The Scottish Government, which recently shelved its LIT plan until it had a parliamentary majority, said it was "looking forward" to the proposals.
Contributors included Sir Peter Burt, who chaired the Local Government Finance Review Committee in 2006, Professor Roger Sandilands of Strathclyde University, and leading economist Professor David Bell, who specialises in housing.
The council admits that it is doing no more than flying a kite at this stage to instigate a debate on local taxation and to offer an alternative to the other taxation systems.
Although the working group was made up of cross-party councillors, the SNP group has claimed the council is prematurely making public what is no more than "a think piece" and insist preliminary studies suggest a change to the "hybrid" formula would be to the financial detriment to the bulk of citizens in the middle council tax bands.
They also claim it could be adopted as an alternative Labour policy on local taxation, despite the party saying in March that it wanted the council tax "improved" rather than replaced. The report states that the proposal would be significantly fairer for the many poorer households that pay disproportionately more in council tax than those with higher income and wealth, often caused by eligible households not claiming council tax benefit.Water charging is often misunderstood and is the cause of many low-income households struggling to pay their "joint" council tax and water bill, it added.Removing the two bills, the group claims, would see greater take-up of water charge benefits and more payments of local tax. It would require all properties banded in the early 1990s to be re-valued by the City Assessor and combined with the value of the land, taking into account location, condition and "the market value at optimum current permitted use".A pilot of the "hybrid" system in the city's Dennistoun area saw those at the bottom end of the scale in Band A pay around £100 less, while those in Band E properties would pay more than £2000 more. Band B residents in four-in-a-blocks would also pay around £200 less.Councillor Stephen Curran, who heads Glasgow's service reform department, said the 3p LIT tax rate proposed by the Scottish Government "would be a disaster for people who rely on public services in Glasgow because the city would face a black hole in its finances".He added: "It is not good enough just to say LIT won't work, or to say we have to replace council tax; you have to take a serious, objective look at all the options.Cllr Curren added: "What we're asking the Scottish Parliament to do is take the same kind of methodical, non- partisan look at the issue that we have and to consider all options - and we're putting a hybrid tax on the table.".
