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Council tax reform ‘doesn’t go far enough’

The SNP's Shetland candidate Danus Skene would like to see the party go further on reforming the council tax.

SNP CANDIDATE Danus Skene says he hopes to persuade the Scottish Government to replace council tax with a local income tax based on the ability to pay if he becomes an MSP at the upcoming Holyrood election.

Skene was speaking in the wake of criticism from Shetland Islands Council and several political opponents over what they view as timid reforms to council tax announced by the SNP last week. 

The changes would see those in the highest council tax bands pay more – but fall far short of previous SNP pledges to abolish the tax altogether and replace it with a new system.

Following nine years of a tax freeze that has deprived local authorities of income, councils including the SIC will now be able to raise rates by up to three per cent.

But critics claim the SNP has spurned the opportunity to devolve greater power to councils – with Shetland MSP Tavish Scott pointing out that the “minor” change being proposed would raise just £90,000 a year for the SIC.

SIC leader Gary Robinson says the extra income to the council's coffers will be minimal.

Skene said the reform announced by First Minister Nicola Sturgeon last week was “progressive” and made the system fairer.

He pointed out it would see three quarters of Scottish households pay the same or less council tax, while those at the top “will pay a bit more in order to fund a major new investment in our local schools”.

Skene noted that low income families would benefit to the tune of an average of £173 per year from a new support mechanism, while there would be additional protection for low-income households in higher bands.

“It is important to point out that Shetland does better than most parts of Scotland out of this deal,” he said. “While the Scottish average is three out of four households will not see their council taxes increased, given the number of houses in Bands E-H in Shetland it works out that 85 per cent will pay no more on their council tax than at present.”

He called on other parties to set out their council tax plans ahead of the election, going on to welcome a move to consult with councils on a “bold plan to assign a portion of devolved income tax”.

Skene said that would offer Shetland Islands Council the incentive to support economic growth and make it more accountable to local people.

He added: “I look forward to having the influence as an MSP to move the Scottish Government towards the removal of council tax and replace it with a local income tax based on the ability to pay, not on the value of property.”

SIC leader Gary Robinson said the additional revenue for the council would be minimal and he felt there was “some way to go” in the debate on local taxation.

“It is a small amount of additional income,” Robinson said, “and while it’s welcome, as others – particularly COSLA – have said, it doesn’t go nearly far enough.

Shetland MSP Tavish Scott: the change to higher council tax bands could raise just £90,000 a year for the SIC.

“And it still leaves us some way behind English local authorities, for example, where the Westminster government have given them much more flexibility than we have here in Scotland.”

Councils such as the SIC are “totally reliant” on their grant from the Scottish Government and earnings from council tax, which has been frozen for nine years.

“These small reforms are relatively insignificant in the bigger picture of local government funding,” Robinson continued. “It’s a drop in the ocean compared to the amount of income councils have lost through, for example, the failure to revalue houses since 1991 and also the council tax freeze.”

He said proposals to devolve a portion of income tax was an “interesting concept” but the “devil will be in the detail”.

“If you look back to the bold statements [from the SNP back in 2007], ‘we’ll scrap the unfair council tax’, they’ve had that opportunity and they’ve not come anywhere close to it.”

Highlands and Islands list MSP John Finnie, who is standing as the Scottish Greens’ leading list candidate in May, led the criticism by saying he was “dismayed” that Sturgeon had given up on her party’s long-stated opposition to council tax.

“In 2007 she said ‘Labour’s hated council tax is totally unfair, and any tinkering with bands won’t make the system any fairer’,” Finnie pointed out. “I think she was right then, and it is extremely disappointing that now she’s planning to stick with the council tax after all.”

Finnie said the Greens had “enthusiastically” participated in the government’s cross-party commission on local taxation and contributed its proposal for a land value tax (LVT).

Labour candidate Robina Barton.

“A land value tax would be payable only on the value of the land itself, not any buildings on top,” he said. “That means householders wouldn’t be penalised for improving their homes.

“Landowners would be incentivised to make use of land – for example, for much-needed housebuilding – rather than idly owning land as nothing more than a financial speculation.”

Labour’s candidate Robina Barton said it was hard to understand why the SNP had waited so long if “this is all they were planning to do”.

“We were all expecting a fundamental change in the system at the very least, since the SNP originally promised to abolish council tax altogether,” she said. “I certianly think that there should be greater devolution of power to local authorities.

“The size of local authorities, their situation and their needs are so varied that it makes sense for them to have the ability to set council tax rates accordingly.”

The Tories' Cameron Smith said the SNP had ended up replicating his party's preferred policy.

Liberal Democrat incumbent Tavish Scott, meanwhile, said the SNP’s reform could have been done at any time during its nine years in power.

“They promised the abolition of the council tax and instead have kept it,” he said. “The change also reinforces the complete centralisation of local government finance in the hands of central government.

“Councils will be capped on any increase to council tax and they must spend any additional income on what the Scottish Government says.

“Sadly local democracy is further diminished. This was an opportunity to give financial responsibility back to councils. The opposite is the case. People will conclude that the SNP government do not trust local councils – full-scale amalgamation of local authorities being discussed at this weekend’s SNP conference.”

The Conservatives’ Shetland candidate Cameron Smith said the SNP had “moaned for successive elections about what they termed the ‘hated’ council tax, but now we see that they agree with its principles in the end”.

He said it had been “another term of broken promises on local government finance” before the SNP had chosen to replicate the recommendations made by an independent commission on taxation established by the Scottish Conservatives.

“It’s welcome that we are moving away from the centralised diktat of council tax freezes towards more local accountability and a fairer system, as advocated by the Conservatives.”