Case for council tax reform is strong but don't expect action from SNP anytime soon

Many people on low incomes struggle to pay their council tax bills (Picture: Joe Giddens) | PA

The community charge, aka the poll tax, was introduced to replace domestic rates by Margaret Thatcher’s government in Scotland in 1989 and UK-wide the following year.

It charged a flat-rate on everyone, regardless of income, and the subsequent uproar has been credited with bringing down the then Prime Minister. Its replacement, the council tax, which introduced eight different rates based on property values, was a fudge that has probably lasted far longer than its creators ever imagined.

It’s over-ripe for reform. The value of someone’s house has always been a poor guide to their ability to pay taxes, particularly as the housing bands are based on 1991 property valuations.

A 2022 report by the Institute For Public Policy Research found 12 per cent of the lowest-income households were behind on their council tax bills and that 51 per cent of those were cutting back on food to save money.

Furthermore, of those in the poorest ten per cent of the population, just under a fifth lived in houses in the upper council tax bands. Many will be pensioners in the family home, perhaps preferring poverty to the loss of a long-established place in their community.

Concern about people’s ability to pay the council tax is one reason why many have called for a local income tax. It is an idea with some appeal, but also some drawbacks. For example, a local income tax would raise significantly more money in some areas than others, so there would need to be a degree of central redistribution.

Council tax reform is one of the many SNP promises that it has struggled to keep in government. The news that the Scottish Government’s group on council finance reform has not met since John Swinney became First Minister in May suggests it remains a low priority.

Governments that care about poverty and social isolation should not be taxing people to the point where they are skimping on food or are forced to leave a much-loved family home for somewhere distant from family and friends. And if the SNP has given up on council tax reform, they need to say so.