Taxing questions

Published on 23/03/2012 00:00

Most of Reform Scotland Ben Thomson’s plea for more powers for local government (Perspective, 22 March) was devoted to the more arcane question of business rates.

His comments on more freedom to change the council tax were both surprising and simplistic. Firstly, proposals for a council tax freeze proved very popular at the last Holyrood election, with most of the main parties supporting it, and differing only on how long it should last.

Mr Thomson says that councils should have the freedom not only to adjust the level of tax up or down, but also to “change to whom and how it applies”.

Now if this means anything, it must mean the freedom to change the valuation bands, examine whether the 25 per cent discount for single householders should continue, and freedom to make decisions on what the tax on second homes should be.

Reforming the valuation bands has been talked about, particularly by Labour in Scotland, for the past decade. Nothing has happened.

Even if some councils were diligent enough to come up with revised schemes, there would still be a political problem to overcome. The existing scheme specifies that those in the highest band should pay no more than three times that of those in the lowest band. This is essentially regressive.

Its justification was again directly political. It was a compromise to assuage those in the Conservative Party who supported the community charge or poll tax, and felt each taxpayer should pay the same for local services.

Changing this principle may lead to more fairness if it were applied at Scottish Government level. It is questionable whether it would be fairer if all 32 councils could determine their own bands and the differential between what those in the highest and those in the lowest should pay.

There may be some problems too in terms of discrimination legislation if each council could decide whether to apply the 25 per cent discount or not. Reforming local government finance is always complex and Ben Thomson needs to look closely at whether his proposals are either practical or politically acceptable.

Bob Taylor

Shiel Court

Glenrothes