Des McNulty: New Year’s resolution for a fair property tax

On 28 December, the Scottish Government announced that the council tax freeze will continue in 2012/13. Any council refusing to go along with the finance minister’s “deal” faces a 5.2 per cent cut in their funding. Many may see this as good news. No-one interested in a fair society should do so.

We are told that the freeze will be worth £500 to the average council taxpayer by the end of the next financial year. This is an aggregate figure covering six years from 2007 – the average amount for 2012-13 is £83, not much more than £1 a week per household.

The Scottish Government’s claim is that households with the lowest income will gain the most.

This is highly contestable. In cash terms, the freeze disproportionately favours those living in large houses, while many of the poorest households will gain nothing at all.

Those in the largest properties will gain nearly four times as much as those in the lowest band properties and more than twice as much as those in Band D.

West Dunbartonshire households, among the poorest on average in the country, will benefit far less than, for example, Aberdeenshire, where there are proportionately more higher band properties.

Low income households will not only benefit least from the council tax freeze, they are also most likely to be adversely affected by changes in the availability and quality of council services.

Withdrawal or reduction of services has a particularly severe impact on elderly people, the disabled and carers, who will either have to go without or pay for alternative provision.

It is a miracle that social services have not already collapsed in areas where the most disadvantaged households are concentrated, but the holes in the safety net are visible to anyone willing to look.

Pay bills may be frozen, but inflationary impacts on other areas of spend and rising demand for services are putting immense pressure on council budgets.

Growing unemployment and cuts in welfare mean increased need for services from more vulnerable families and individuals.

Cuts imposed this year by administrations in Aberdeen and Edinburgh councils, hitting social work and schools budgets, are a foretaste of what will happen in every Scottish council area after the local government elections in May.

The Scottish Government may rightly criticise the Westminster government’s spending cuts – but it should gain no credit for holding council tax bills down.

The council tax freeze is not only regressive in its impact. It also entails foregoing millions that would otherwise have come from Westminster to meet the cost of council tax increases for the least well-off.

The council tax freeze is not alone in disproportionately benefiting the better-off – at a cost that has to be met by reduced spending elsewhere.

Before free prescriptions were introduced by the SNP, no charge was payable by the elderly and those on low incomes. Prescriptions were made free for those who could afford to pay.

The cost of free higher education is, in large part, being met through slashed budgets for further education colleges (which predominantly serve people from less affluent backgrounds).

Resources are being redirected not to support opportunity for all, but opportunity for the generally more affluent and articulate.

At the last election, Labour’s adoption of the council tax freeze and free higher education was a double failure. It was a tactical blunder, because Labour gained nothing electorally from being seen to mirror SNP policies and have nothing to say of its own.

More seriously, it was an abrogation of responsibility. Those who believe in a fairer society need to make the case for progressive taxation and the pursuit of greater equality.

People in Scotland are no keener on paying tax than people anywhere else. But in a society that prides itself on its commitment to helping the less fortunate, policies that benefit the rich more than the poor cannot go unchallenged.

The council tax freeze is unjust.

The 2012 New Year resolution for all genuine social democrats must be to reject giveaway policies. It takes conviction and moral purpose to make and defend hard choices.

But especially when budgets are stretched, there is an obligation to apply resources where they are most needed. In the 1980s, councils played a vital role in mitigating the worst consequences of unemployment.

The social strategy adopted by Strathclyde Regional Council redistributed resources towards people in greatest need and those communities worst affected.

This time round, the Scottish Government is giving back money to the better-off, cutting back money for regeneration in places like Clydebank, Inverclyde and Irvine Bay that desperately need investment, while restricting councils by effectively capping expenditure.

Council tax, in its current form, is by no means perfect. But the freeze is an irresponsible answer. We should be using the council tax to deliver services while urgently seeking consensus on – and implementing – a replacement taxation system.

Not an additional national income tax, but a tax that provides a direct link to the delivery of local services by local government.

The fairest solution is a modern property tax, based on the capital value of property rather than notional rents – and so avoiding the anomalies of banding.

•Des McNulty was a member of the Scottish Parliament from 1999 to 2011, serving as Labour’s Shadow Cabinet secretary for education and lifelong learning until he was defeated at the 2011 election.