Squaring Several Circles – Reforming Local Taxation

CSPP Chair Professor Richard Kerley gives his initial reaction to the Commission on Local Tax Reform's final report


It always used to be the case that the reports of Commissions and Committees were visually dull. Perhaps the odd map or table, very occasionally a chart – but never pictures.

And now? Always pictures; charts diagrams; infographics. The Report of the Commission on Local Tax Reform has plenty of them – somewhere in the order of 30, and all the location pictures are in sunshine – as they always are in all such reports nowadays.

What is missing is the diagram showing the Commission trying to square several circles at once.  Or, perhaps, trying to pretend the circles don’t need to be squared; but they do.

Some examples.

Early on in the report they argue – and I agree with them – that neither the council tax, nor the council tax freeze can continue. One of the reasons is that ‘some people are paying more than they should ‘. Omitted here is the matching statement that some are paying less than they should; that is referred to later in the report, in  research indicating  that about 57% of properties appear wrongly banded, with those that should move up and down about equal in number. It’s early recognition that as in all proposed tax changes; winners are often silent; losers always vociferous – look out for that. Also keep an eye open for the public meetings throughout Scotland where MSPs and MPs are shouted at by voters and residents.

The report also discusses studies carried out by different research teams examining aspects of local taxation in different countries. These indicate that concepts such as equity; fairness; ability to pay – and critically, how to apply these in practice – are something that governments in different countries struggle with. Balancing this problem with the near universal recognition that land and property are major assets that should not be left untouched by taxation leads the Commission to, in effect, suggest more than one form of local tax.

This seems to me to make a lot of sense – in principle – but as always with tax, the devil is in both the detail and in the implementation. And also of course, in what is not considered.

So, for example, a chart that will clearly be helpful to readers shows that the Council Tax pays for far less of local government [at about 12%] than many tax payers belief it does. It is however now outweighed in volume by Non Domestic Rates at 15% - a substantial slice of taxation that the report only mentions in passing, as it was not in their remit.

Some will be disappointed, some critically amused, that this report does not produce an agreed solution to a complex problem that has dogged us for more than 25 years now.

There’s both a reason and an advantage that the Commission did not do that, but instead outlined and discussed a range of options. Firstly, the preferred mix of solutions that one party may put to the electorate is probably not the preferred options for other parties. Secondly, when others have presented a ‘take it or leave it solution‘ as has happened before , governments and opposition parties can often be overhasty in responding with a ‘we’ll leave it, thanks ‘ message. This is precisely what happened to the Burt report some 10 years ago – shamefully within about an hour of formal publication - as all the major political parties turned their thumbs down .

This report at 89 pages; the Technical Annex at 245 pages ; and the assembled evidence at 400 pages provide us with a lot to chew on over Christmas.

I have already asked my family for ‘The Power Broker‘ by Robert Caro that weighs in at 1300 pages. Fortunately I can read in parallel so will try and tackle both.

Note: you can read the CSPP’s submission to the Commission on Local Tax Reform in our library section

Centre for Scottish Public Policy
c/o Digby Brown LLP
160 Causewayside
Causewayside House
Edinburgh EH9 1PR
Follow us