Ian Swanson: Sturgeon can afford to be bold on tax reforms

Nicola Sturgeon reveals her council tax plans at Lasswade High School last week. Picture: PA

Nicola Sturgeon reveals her council tax plans at Lasswade High School last week. Picture: PA

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Timid is the word used almost universally by critics of the SNP to describe Nicola Sturgeon’s proposals for 
reforming the council tax.

The Nationalists repeatedly promised to abolish the “hated council tax”, as they always called it. They used to want to replace it with a local income tax. And even after that idea went off the agenda, they insisted that “tinkering” with the current system would just not be enough.

The cross-party commission which the Scottish Government set up along with local government body Cosla to look at reform produced a report at the end of last year which seemed to prove there was a widespread consensus. “The present council tax system must end,” it declared unequivocally.

Yet after all the rhetoric and rumination, the change which Ms Sturgeon announced last week was simply to increase the existing tax for people in the top four bands so they pay up to £500 or so more each year.

The council tax was introduced in 1993 to replace Margaret Thatcher’s poll tax which demanded that every individual make the same contribution to pay for local services regardless of property, wealth or income.

The new tax was based on eight bands of property values, with people in the poshest homes paying more than those in the poorest housing.

It seemed an improvement at the time. But more than two decades on, the commission explained clearly why the tax now deserves to be labelled “unfair”: top-end properties are now worth an estimated 15 times as much as those at the bottom of the scale, yet council tax bills for the most expensive homes are just three times the amount for the poorest.

However, the SNP reforms will make hardly any difference to that ratio. In Edinburgh, the bill for Band H properties will go up from £2338 to £2864 per year compared with the unchanged Band A bill of £779.93.

The party has turned its back on previous suggestions, which date back to Jack McConnell’s time as First Minister, that extra bands could be created to make sure people in the most luxurious homes shoulder a bigger share of the burden.

And if they were willing to be more radical, the Nationalists could have gone for a completely new property tax and land tax, or even looked again at local income tax – all options explored and set out by the commission.

Instead, Ms Sturgeon is proposing changes which could have been made years ago. If this tweaking of the band ratios is the answer to the council tax injustice, why was it not done when the SNP first won power?

There are plenty of good reasons for politicians not wanting to revamp local taxation – the whole area is a minefield. But the reluctance to make any major change has left us with a system clearly past its sell-by date.

Perhaps the most vivid evidence of this is the fact that the property bands are still based on 1991 valuations and the farcical situation where new-build homes have to be given an estimated 1991 value for taxation purposes.

No politician wants to be the one responsible for ordering a revaluation because there are so many potential losers who would end up facing higher charges and probably take out their frustration at the ballot box.

But if any party is ever going to be bold enough to take the council tax bull by the horns, this is the best chance. The SNP knows it is going to win a clear majority at the elections in May, giving it a secure position in charge of the Scottish Parliament for another five years.

There is no need for timidity – and no excuse.

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