Plans to overhaul the council tax in Scotland will improve the “outdated and unfair” system and leave England with the most “regressive” local taxation in the UK, a new report today finds.
Rich Scots will lose out heavily in the changes being proposed by the Scottish Government, while the poorest half of households won’t be so badly affected. Labour and the Greens have also set out similar plans for change which will bring an end to the near decade-long council tax freeze.
The report today by the Resolution Foundation says the SNP’s plans are “progressive” as they benefit low earners while the wealthy pay more. Its Battle of the Bands report models the impact of the Scottish Government’s council tax plans, along with those proposed by Scottish Labour and the Scottish Greens.
Adam Corlett, Economic Analyst at the Resolution Foundation, said: “Britain’s council tax system is outdated, unfair and in urgent need of reform. While the issue has largely been ducked in England, Scotland now looks set to embark on significant improvements.
“Plans the SNP aim to implement next year would see a £100 million tax increase with the richest tenth of households accounting for half of the extra tax take while lower income families would on average face a negligible tax rise. Some low income households would actually be better off after the changes, and increasing the take-up of Council Tax Reduction would further reduce the impact on these families. It’s encouraging that while the proposals offered by Scottish parties differ in design and by the amount they raise, all improve the proportionality of the system.”
With Wales having added an extra band at the top and undertaken a revaluation, and Northern Ireland maintaining its proportional rates system, the report suggests that England will be left with the most regressive domestic property tax system in the UK.
The average cash loss for the richest tenth of households would be £125 – ten times the average loss for the bottom half (£11). The richest tenth will lose three times as much as the bottom half.