THE SNP has avoided an embarrassing setback over controversial council tax reforms thanks to Tory MSPs.

An amendment to a motion seeking committee approval for raising taxes on homes in higher bands, which noted wider concerns around the policy raised by a series of experts, won the backing of Labour and Green MSPs but was voted down by SNP and Conservative members.

Mr Mackay eventually won approval at committee stage for the planned changes to council tax bands E to H, but only after facing repeated questions about the fairness of his overall policy and implications for local accountability.

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The SNP has refused to order a revaluation of properties, meaning bills will continue to be based on 1991 prices, despite an expert commission set up by Nicola Sturgeon warning that almost 60 per cent are paying too much or too little council tax as their homes are in the wrong band. Marco Biagi, the former SNP local government minister who chaired the commission, said this week: "We can't base a tax on circumstances of 1991 indefinitely."

Andy Wightman, the Green MSP who proposed the amendment which is believed to be the first of its kind in Holyrood history, asked: "I have a constituent whose flat in Edinburgh is in band E, but is now worth quite a bit less, £20,000 in fact less, than nearby flats in band B.

"What should I say to him when you tell parliament and this committee that your proposals are progressive and proportionate and fair?"

Mr Mackay replied that the Scottish Government did not want to deliver a "shock to the system" that would be caused by a revaluation or "astronomically high" increases to bills.

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He told Mr Wightman: "The proposals we are putting forward are fair and a majority of households won't pay any more as a consequence of the multiplier change, and we're trying to protect households from a high council tax increase. We're also generating more resources for public services and I think it's a fair and balanced approach."

The finance secretary said that "a journey" of council tax reform was underway and that other proposals could be considered in future. However, he refused to be drawn on when a revaluation would be ordered, only ruling it out over the next five years as it was not included in the SNP manifesto.

In a further indication that the overall proposals do not command support in Holyrood, Tory MSPs refused to back the band changes when it came to a final vote due to concerns over local accountability. Mr Mackay's motion, which was solely related to the changes to council tax bands, was backed by three SNP MSPs and Labour's Elaine Smith, while Mr Wightman abstained.

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The SNP has said councils will keep "every penny" of additional tax raised through the reforms, with the policy aimed at providing an extra £100m a year to help tackle an educational attainment gap. However, grants to local authorities will be adjusted to claw back cash from richer areas and channel it to poorer communities, meaning some could lose more revenue than they receive in extra tax and council tax payers will effectively be funding services in other parts of the country.

Graham Simpson, the Tory MSP, said: "I'm essentially against what's being proposed because it breaks democratic accountability of councils. I can't get past that. It's a fundamental change, in my view, to the way local government is funded and local services are being funded."

Kenneth Gibson, the SNP backbencher, told Mr Mackay that another reform - removing a council tax freeze but capping any bill increases at three per cent per year - is "not progressive".

He said: "The three per cent figure seems to be arbitrary... it goes back to the issue of local democracy which has been raised with us by witnesses. Surely it should be up to local government to decide what their increase, if any, should be because it's about electing people to take local decisions.

"Lastly, three per cent across the board is not progressive because it affects everyone equally... a lot of people's income isn't increasing by three per cent a year so that will surely hit people in the lower bands. If there's going to be a three per cent a year increase, which if you're setting a cap is more likely than if you just leave it up to local government to decide, that's surely going to be increasing the burden in the years ahead and unpick some of the good work done by the council tax freeze."

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Mr Mackay replied: "All I can say is the SNP stood on a manifesto commitment and that was endorsed by the people to follow this approach.... the reason we proposed the three per cent cap is we feel that's a reasonable cap, a reasonable limit.

"I do think parliament is entitled and government is entitled to set a cap if we have a mandate from the people."

Following the committee session, the motion to increase bands will be voted on by parliament at a later date. Other aspects of the council tax reforms will be voted on separately.