EARLIER this year, YouGov polling for Tax Justice Scotland found a staggering 83% of Scots want a fairer system to replace Council Tax, with more than half supporting political party commitments to reform it during the next Parliament.
John Swinney hinted at abolishing Council Tax at the end of May, saying the Deputy First Minister had already started work on reforming the system. The SNP have been pledging Council Tax reform in some form or other since before first taking power in 2007.
But following this week’s Programme for Government announcement, there was no sign of significant Council Tax reform beyond the introduction of two new bands for properties valued over £1 million – a move welcomed but largely regarded as tinkering around the edges of a broken system.
Amid widespread coverage of the SNP’s planned food price cap and mergers of NHS health boards across Scotland, anger and frustration over a repeated reluctance to get rid of the outdated and regressive Council Tax – which remains based on property values from 1991 – was palpable as campaigners from Oxfam, the Scottish Trade Unions Congress, Future Economy Scotland and more sounded alarm bells.
Roz Foyer, general secretary of the STUC, told the Sunday National that after speaking to all parties about the urgent need to replace Council Tax, she is losing faith there is any political will to do so.
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“The time to act must be now. I think politicians are running out of time and faith from members of the public,” she told the Sunday National.
She went on: “We’ve not only spoken to government but to every party about the need for them to sit down and grasp the nettle on a more progressive system, and the real tragedy of all this is from what we can see from polling, this would be a popular policy [replacing Council Tax].
“I am beginning to lose the will to live when it comes to speaking to these politicians about this issue. We’re looking at a group in the Scottish Parliament who are lacking the political courage to come together and come up with a system that’s going to work.
“They could’ve at least made a start by starting off the revaluation of land and property. It’s not been revalued since 1991 and that is completely unacceptable. We can’t have a fit for purpose tax system in 2026 based on 1991 prices.
“The fact they’re not prepared to start that work means it’s difficult for me to have faith they have the political will to seek a solution.”
Outdated property valuations mean many people may be paying too much or too little Council Tax because they are in the wrong band. Meanwhile, the effective rate of tax for higher valuation bands is lower than it is for lower valuation bands – so the more your house is worth, the less effective tax you pay.
In January, when the Scottish Government announced its plan to introduce two new higher bands, economics expert Emma Congreve from the Fraser of Allander Institute said a two-tier system would be created where a tiny proportion of homes will be based on their up-to-date value while the vast majority are still three decades behind, branding it an “illogical” move.
But not only is the Scottish Government’s plan considered insufficient, but economists are now deeply concerned about the wider impacts of not introducing full-scale reform as Scotland faces a giant fiscal gap of £2.6 billion by 2029/30.
“We are looking ahead to a looming fiscal gap in the future and some of the government responses to that are to address that mismatch through public body mergers but also through the devolved public sector workforce reduction strategy,” said Miriam Brett, co-director of think tank Future Economy Scotland.
“With this approach it is very easy to slip into austerity.”
She went on: “Despite a widespread agreement for [Council Tax] reform, what we’ve seen is incremental changes to the system that we would argue are tinkering around the edges of a taxation that there is consensus isn’t working, and that won’t suffice.
“That was true prior to the looming fiscal gap; it’s truer today, and there is a need, considering Scotland’s budget gap to be really bold on taxation, and this is one of the areas the Scottish Government can do that with.”
While a report last month by Ipsos and the Fraser of Allander Institute said implementing a wealth tax in Scotland would require “careful navigation of constitutional constraints”, reforming Council Tax is a way the Scottish Government could tax wealth that is entirely within its power.
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And with an ageing population, ambitions to reach net zero by 2045 and core objectives needing funding such as tackling child poverty, Brett stressed that the need to replace Council Tax is becoming more urgent.
“There’s public support to back this but for a long time we’ve been caught in a political deadlock of nobody wanting to make the first move to reform this,” she said.
“We are in a very constrained fiscal landscape, and fiscal pressures will increase over the next five years. We face significantly increased spending and investment needs, so we would argue now is the time to be really bold and ambitious.”
The longer Council Tax isn’t reformed, the more inequalities are exacerbated.
Since 1993, there’s been a 168% increase in local house price growth in Aberdeen while that figure is 500% for East Lothian.
Council Tax arrears in Scotland also amount to £1.6bn in more signs the system is not working.
Katherine May, acting head of Oxfam Scotland, said: “We welcome that there are two new additional bands, but this is not the systemic change we need. The Scottish Government analysis is that these bands could create £12m to £16m of annual revenue and that’s not the change we need to see.
“We need to see a complete reform of the Council Tax system with a complete revaluation and then introduce a proportional property tax.
“Council Tax reform is the Loch Ness monster of Scottish politics – always rumoured but never seen.
“There’s £1.6bn of Council Tax arrears, and if there’s that much, the system is not working, and we need to be putting in place a system that supports people on low and middle incomes rather than one that perpetuates inequality.”
A Scottish Government spokesperson said: “Council Tax reform requires political consensus and the Scottish Government is working cross party to build a shared agreement on the future of Council Tax in Scotland.
“The Scottish Government has delivered a range of improvements to make Council Tax fairer and more affordable, including supporting those on the lowest incomes through the Council Tax Reduction scheme, with around 460,000 households saving £900 per year on average. Ministers have also enabled councils to increase charges for second properties.
“The introduction of a Mansion Tax will raise millions in additional funding each year for local public services by requiring those who have the most to contribute more.”
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