THE first hikes might end up being the most painful.
When East Lothian councillors meet today they are expected to approve a whopping 10% rise in Council Tax bills for 2025-26, along with further hikes of 5% every year for the next four years.
Edinburgh and North Lanarkshire will set their budgets on Thursday, with similar double-digit increases reportedly under consideration.
By contrast, residents of Glasgow, West Lothian and South Lanarkshire are expected to face less steep rises of 5%-6%, as councillors balance budgets amid a cost-of-living crisis that has left many struggling to pay their existing bills.
READ MORE: How much will my council tax increase by? See the latest
Those living in the local authorities facing the biggest increases – which are also likely to include Fife and the Scottish Borders – may protest that this doesn’t seem fair. With equal validity, those living in the most cash-strapped areas may complain that they are unfairly being denied adequate local services by councillors who are unwilling to demand a greater contribution from residents.
The bigger problem with Council Tax is that it’s been blatantly unfair in two fundamental respects for decades, and there’s nothing individual councils can do about that. The central issue – as spelled out by a report last week from the Institute for Fiscal Studies – is that vast numbers of properties are in the wrong band, due to fact there has been no revaluation exercise since 1991.
Indeed, the think-tank estimates that more than half of properties would end up in different bands if a revaluation were to be carried out today. It also highlighted that the tax is currently regressive in terms of property values, rather than proportional.
The solutions to these problems might seem obvious: conduct a revaluation of all properties, get them all in the right bands, then set the rates in proportion to those values. Will the Scottish Government do this? Maybe. One day.
But not any time soon.
Last week we learned that the future of local taxation is “to be considered” as part of “efforts to explore options” for “potential reform”. It’s hardly inspiring stuff, is it?
These efforts are to involve a public consultation, a series of “town hall” meetings in the autumn, and a set of “focussed discussions” with key stakeholders and experts. One would certainly hope the discussions would be focused rather than vague – it’s a bit concerning that this needs to be specified.
The problem for the SNP is that reforming Council Tax would be a very belated admission of defeat. In 2008,Alex Salmond made plans to scrap it and replace it with a local income tax central to the legislative programme of his minority government. Opponents were quick to dismiss what they dubbed a “tartan poll tax”, and it never came to fruition – even after the SNP achieved a majority.
Instead of reform we’ve seen capped rises and Council Tax freezes – including the one announced in 2023 by then-first minister Humza Yousaf that came as a surprise to local authority umbrella group Cosla, which hadn’t been consulted.
The Scottish Government is now focussed on working with Cosla to build consensus about the way ahead, but do we really need yet more consultation?
It’s been just over a year since a report on the last Council Tax consultation was published. This analysis revealed the exercise to have been a complete waste of time, asking the wrong questions and getting predictable answers.
The central proposal put forward in 2023 was for households in the highest Council Tax bands (E to H) to make a greater proportional contribution. This would have been a repeat of an exercise carried out in 2017. Unsurprisingly, the great majority of those who responded to the consultation lived in band E-H properties, and only 2% of them supported the proposal to put up their own bills. But even among respondents living in band A to D properties, support for the proposals was a measly 22%.
READ MORE: Majority of Scottish households paying wrong council tax, IFS says
Those living in band E to H properties argued that the value of their homes did not correlate to their ability to pay more Council Tax – a position that might support arguments in favour of a local income tax or instead a reformed council tax system that, for example, allowed pensioners on fixed incomes to defer payment.
But the actual value of their homes is not currently being taken into account when calculating the Council Tax due – which is why the blunt instrument of band-based proportional increases cannot be fair in any sense of the word until a revaluation is carried out.
Do we really need further consultation to tell us what we already know?
Surely it is a no-brainer to revalue homes urgently, correct existing anomalies and then assess whether further reforms are required? Years of empty promises of radical reform at some unspecified future date have allowed the situation to become even less fair than it was to begin with.
If there was a fair, workable alternative solution to this mess, wouldn’t it be in place by now?
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