The case against the council tax has been gathering strength for years, but the need for change is now urgent. A combination of the UK Govern-ment’s austerity cuts and the Scottish Government’s council tax freeze has put intolerable pressure on council budgets, with Glasgow City Council saying just a few days ago that it faces a budget blackhole of £121million in the next two financial years. We all know what that means in reality: more job losses and even deeper cuts into vital community services. It cannot go on like this.
But what should replace the council tax? It was introduced 20 years ago as a quick fix for the poll tax and is based on property prices alone, but as part of our Reshaping Scotland series, The Herald has been arguing that any replacement should be based on a simple principle that the wealthier you are, the more you pay. That means any new local tax should take into account both property values and the householder's income rather than property prices alone.
It now appears that, at long last, a consensus is gathering around this op-tion with the Commission on Local Tax Reform looking certain to include a hybrid tax based on property and income among its recommendations. It will do so after a survey it conducted showed that more than half of those who gave their views said local taxes should be based on in-come. The survey also showed that more people wanted local taxes to be set by councils rather than centrally by the Scottish Government.
The commission’s final report is expected to be published in the next two weeks, but this early indication of its recommendations is welcome. Not only is the present system out-dated and broken, it is a regressive force in society as it hits poorer households harder than the more affluent ones. On top of that, the council tax freeze, started by the Scottish Government with the best of intentions at the height of the recession, has exacerbated the situation because it is richer households that are benefiting disproportionately.
An end to the council tax freeze, followed by a replacement tax based on income as well as property, would help address these problems and would free up councils to set their own tax levels according to their local priorities. As the commission’s survey shows, there appears to be strong support for this option – and it might also help strengthen local democracy by allowing councils to set their own tax and then face the voters to take the punishment or the praise.
However, any reform of local taxation should not go ahead without ac-companying reform of local government. For years now, councils have been promising that they would do more to share their resources, but pre-cious little progress has been made. Our system of local taxation must change, and change quickly, for the sake of council tax payers, councils themselves and everyone who uses their services. But the change should only happen as part of wider reform that looks at the number of councils in Scotland and much greater sharing of resources between them.
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