Argyll and Bute residents are getting the worst deal in Scotland over their council tax as a new study reveals a postcode lottery over bills.

Research looking at council tax as a percentage of average annual pay - puts Argyll and Bute as the most expensive, with 5.04% going on paying the £1281-a-year bill.

But residents of the neighbouring Western Isles in the Na h-Eileanan Siar council area, are getting the best deal. They have the second cheapest bills in the UK averaging at £888 per home, amounting to just 3.33% of residents' annual pay.

The most expensive average bill in Scotland, nearly double that of Na h-Eileanan Siar, is in East Renfrewshire whose residents have to fork out £1573 a year. With residents earning over £42,000 a year on average, they only have to spend 3.69% of their annual salary on council tax.

The study was commissioned by mortgage platform Haysto and analysed Scotland’s average council tax per dwelling against average annual pay per area to discover where residents are spending the biggest proportion of their income on bills.

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It said: "It was recently revealed that Na h-Eileanan Siar experienced the biggest house price increase (12.6%) in Scotland, even higher than the recorded increase of 8.4 percent for the whole country between 2019 and 2020, thus adding to the argument of disproportionate rates across the nation."

The Herald:

Earlier this year, all 32 of Scotland's local authorities again decided to freeze council tax rates at last year's levels.

The respected think tank tank, Institute for Public Policy Research Scotland said in April that council tax should be scrapped to be replaced by a fairer and more radical way of raising revenue, based on the value of property.

It said that the council tax used by local authority to run local services from running schools to maintaining roads, is out-dated and unfair on the poorest in Scotland.

Haysto's examination found that the national council tax average for Scotland was £1,195 per dwelling. With the average salary at £29,980. that made the average council tax payment four percent of residents’ annual pay – the lowest of the UK nations.

It is fairer than Wales, where residents are paying an average of £1,544 per dwelling, an average of 5.76 percent of their annual pay – the highest proportion across all of Great Britain.

In second place on the best value list was North Lanarkshire, with residents only expected to pay £1,013 - 3.48 percent of the average annual salary of £29,094.

South Lanarkshire (3.62%), East Renfrewshire (3.69%) and Shetland Islands (3.74%) complete the top five places in Scotland where residents paid the lowest proportion of their annual salary towards council tax contributions.

The Herald:

After Argyll and Bute, it is Midlothian residents that have the second-highest area for council tax contributions, where residents are expected to pay an average of £1,408, 4.65 percent of their average annual wage of £30,306. Property prices in this area have risen by 12 percent in the last year alone.

Aberdeenshire (4.58%), Stirling (4.49%) and Highland (4.46%) all complete the five highest areas for council tax contributions measured against annual average salaries.

Paul Coss, specialist mortgage broker and co-founder of Haysto said: “While Scotland is deemed the fairest nation when it comes to council tax percentages, it’s understandable why there are calls for action on reforming Scotland’s council tax system.

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“With people paying over five percent of their annual salary, on top of existing bills and a rising cost of living and with the recent property price increases across the nation not reflecting the current council tax bands, it’s something that needs to be addressed.”

It comes a week after the Accounts Commission, which examines local authorities' finances warning that councils face a "clear risk" to their financial sustainability without a radical shake-up in the way they are funded.

The public spending watchdog said the 32 Scottish councils which run many of our services from education to dustbin collections need the "certainty" of a multi-year financial settlement from the Scottish Government so they can make proper planning.

Presently the Scottish Government provides funding on an annual basis to local authorities, which employs 206,000 people and has an annual spending budget of £12.6bn to provided services for the nation.

The Herald:

The concerns come as councils collectively lost an estimated £400m in income partly through the closure of sports, leisure and other facilities while having additional costs of £800m partly through delays in capital projects due to Covid-19.

Fourteen years ago, when the SNP first took control at Holyrood, a council tax freeze was meant to be a temporary measure while a way to replace the council tax was found.

But replacing the council tax proved difficult, with the basic council tax rate not rising anywhere in Scotland between 2007 and 2017.

Since then, councils have been able to put it up within agreed limits, although some still opted for lower rises and freezes.