Commission on Local Tax Reform Says Council Tax 'Must End'

The current council tax system in Scotland "must end", the specially set up Commission on Local Tax Reform has concluded.

It looked at alternatives and outlined three options, one based on property, the others on land and income.

The cross-party body believed any new system should continue to be one of "general tax" rather than a "system of charges for specific services".

Scottish councils typically raise 15p of every pound spent from council tax.

The report has not recommended any particular option but hopes to inform the debate ahead of next year's Holyrood election.

The current system contributes £2bn to help pay for local government expenditure such as refuse and recycling, education, roads maintenance and leisure facilities.

The commission outlined three alternatives which could bring in a similar sum of money;

1) a replacement property tax, which would be based on the value of land and buildings.

2) a land value tax, based on the value of land only.

3) and a local income tax which would raise revenue based on a householder's taxable income.

Its report said: "The predominant view of the commission is that local government's tax base should, if it could be proved feasible, be broadened to include income.

"Income is widely perceived to be a fairer basis on which to levy a tax, although a locally variable income tax presents substantial administrative challenges."

'Making local taxation fairer'

The reform group was set up by the Scottish government and the Convention of Scottish Local Authorities in February 2015 and was tasked with examining alternatives that would "deliver a fairer system of local taxation".

It listed a number of recommendations, including;

- a system allowing local rate-setting "wherever possible"

- minimising the need for complex relief schemes for individuals or households

- a transitional framework enabling taxpayers to adjust to the new system and new tax liabilities

- broadening the local tax base to include environmental, resource, sales or tourist taxes, appropriate to local circumstances

- and local authorities with lower tax bases should not lose out as a result of a changed system

The report added: "We believe this is the time to reform local taxation. We have conducted more in-depth analysis of potential forms of tax available than ever before to inform debate and the construction of detailed proposals.

"We have concluded that there is no one ideal tax but we have shown that there are ways of designing a better tax system.

"There is now a real prospect of beginning a programme to make local taxation fairer - more progressive, more stable, more efficient and more locally empowering."

Minister for Local Government Marco Biagi said: "We will consider the findings of the report carefully and we will set out our detailed proposals for reform by the end of the parliamentary term, embodying the principles of the commission's report."

Scottish Labour spokeswoman Jackie Baillie said: "This is a comprehensive report that looks at a number of different options for local government finance. The challenge for all political parties now is to consider these options and come forward with their solution to put to the electorate next year."

Source and photo: BBC

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