(CSPP) – On Tuesday night the Chair of the CSPP, Professor Richard Kerley, was invited on current affairs programme Scotland 2015 to discuss the options for reforming local taxation.
The interview occurred in the context of the Scottish Government’s upcoming 2016 – 2017 budget, and the report of the Commission on Local Tax Reform, which aims to be published by the end of the year.
On the BBC 2 Scotland programme, the CSPP Chair explained that while the existing Council Tax freeze has disadvantages due to its regressive nature, it would not be politically easy to change or replace it.
“The idea of a stand-still (frozen) Council Tax, which we’ve had in Scotland for eight or nine cycles now, is simple to understand. It’s politically appealing, even if it doesn’t achieve an awful lot for low earners, which is the claim that’s often made for it. Trying to drop (the freeze) after such a period of time will cause difficulties for any or all political parties that attempt to do it”.
The BBC’s Douglas Fraser explained some of the options that had been debated for the reform of local tax raising, such as additional council tax bands, a local income tax, and a land value tax.
Professor Kerley, who is also a professor emeritus at Queen Margaret University, explained the rationale and advantages of a land value tax:
“Essentially we can put a value on land no matter what is built on it, or what is not built on it. It has a rationale which…draws taxation from [the land’s] general value. It’s most positive advantage is that it discourages land hoarding, because it says we will tax the land even if you do nothing with it”.
The CSPP Chair added, “It encourages the use, for example, of empty properties in town centres. Those communities globally which have a land value taxation system have tended to see the number of empty properties come down”.
Advocating Local Tax Reform
The CSPP sent an evidence-based submission to the Commission on Local Tax Reform, which received widespread media attention and can be read on the CSPP’s library page. The submission was drawn up with CSPP members’ input.
The submission made a number of recommendations for the improvement of the Council Tax, including for revaluation and extension of bands, and advocated discussion in the long term “about land value taxation, or a form of domestic property taxation based on capital values and annual percentage levies [a la Burt Report]”.
The CSPP’s submission also suggested that policy-making should be guided by “a default assumption that specific competences and decisions – e.g. on local tax levels, should be made as locally as possible”, as part of the Centre’s approach to the importance of “people” and “place”.
Note: The Scotland 2015 report can be accessed on BBC iPlayer here, and begins from 9 minutes into the programme.