Leaders: Fairness vital for new tax system

A REPLACEMENT for council tax is long overdue, but finding the way forward involves a careful balancing act

The new council tax replacement must be simple and fair. Picture: TSPL
The new council tax replacement must be simple and fair. Picture: TSPL

It’s now almost a decade since the last major government-backed commission looked into replacing the council tax in Scotland. On that occasion, former Bank of Scotland boss Sir Peter Burt’s proposed system of property tax was rejected by then First Minister Jack McConnell before his report was even formally published. It just goes to show that taxation, and how to raise it, will always be a political minefield.

The prospect of change, and winners and losers emerging, is so sensitive that the need to establish a strong consensus is pivotal. That’s why the report by the Commission on Local Tax Reform carries such clout. As well as local government minister Marco Biagi, it also included Jackie Baillie, one of Labour’s most senior figures in Scotland, along with Liberal Democrats and Greens. The message is clear: the council tax is dead and change is on its way. Even the Conservatives, who stayed away, are likely to publish proposals for change next year when a commission by Sir Iain McMillan reports on the issue.

That the council tax is completely detached from the reality of the situation on the ground in Scotland today is beyond argument. It is based on property values from 1991, despite fluctuations in the market since that time. The freeze over the past eight years has further distorted the situation and has seen £2.5 billion transferred from central government coffers to fund it – all money lost to frontline public services.

Most people would endorse the idea that those who have the most should pay the most. The difficulty is in deciding who has the most. The problem with any property tax is that the size of house is not always a good indicator of ability to pay taxes – there could be elderly people in big old houses who have very little income.

And any revamped system of property tax brings with it the need for a major revaluation of the properties in Scotland – although interestingly the report suggests this would have a minimal net impact, with a roughly equal amount of properties moving up in value as moving down.

A land value tax could be an answer, but it remains an unknown quantity in Scotland and more research will be needed to set out its full impact. A local income tax seems an obvious way to ensure fairness, but even this has its pitfalls. There can be people who are very comfortably off in lovely houses and estates but whose actual income is relatively small. Some people may also feel naturally resentful about being taxed on their hard-earned salaries twice. And there are wider problems with a local income tax – couples with children are likely to be hit harder than those without, and two earners will pay less than one person on the same income.

The new tax-raising powers coming to Scotland could make such a system easier to implement but it serves to illustrate the difficulty in achieving fairness with any one single tax instrument. Perhaps this is why the Commission appears to lean towards a property-based system which takes some account of income and needs-based relief. The problem with such a hybrid set-up is that it becomes complicated and therefore expensive to administer, and needs more tax income to gather the tax. So when coming up with a system, its simplicity is almost as important as its fairness.

Painful revelations about pills

None of us likes having the wool pulled over our eyes – and that goes double when the deceivers turn out to be large multinational companies.

It’s even more infuriating when we are hoodwinked over our health, so the news that a major pharmaceuticals brand is being forced to remove popular over-the-counter painkillers from shelves Down Under quite rightly rings alarm bells here.

The Australian federal court has ruled that British-based firm Reckitt Benckiser has been duping customers when selling pain medication aimed at complaints such as backache and migraines.

The firm has been given three months to withdraw targeted products for back pain, period pain, migraines and tension headaches.

The move comes after it was confirmed that pills marketed for targeted pain relief contained exactly the same active ingredient as the standard Nurofen ibuprofen product and were no more effective.

The drugs giant insists it “did not set out to mislead consumers”, claiming the packs were designed to help customers “easily navigate” its range in outlets without a pharmacy.

So when you consider that consumer research has found nine out of ten people are searching for relief from a particular type of pain and seven in ten say pain-specific packs help them decide which products best suit their needs, you can hardly blame Nurofen for taking advantage of this gap in the market. You can be sure its competitors are doing it too.

However, the lawsuit has exposed a nasty side effect in this “helpful” branding: it transpires that Nurofen charges nearly double the price of its standard ibuprofen for its targeted-relief products. That really is a bitter pill to swallow.