MORAY Council has said plans to raise council tax by 18 per cent are “no longer tenable” as a result of Scottish Government financial penalties.
The council’s independent-Conservative ruling administration group previously said the increase was essential to protect frontline services in the face of an £11.9 million deficit over the next year.
None of Scotland’s 32 local authorities have increased the tax since the Scottish Government introduced a freeze in 2007.
Council leader Stewart Cree said the local authority had taken into account the forfeit of £1.1 million from the Scottish Government allocated to offset the freeze but was now facing the loss of about £5 million as a result of the withholding of funding for maintaining teacher ratios and integrating health and social care.
He said: “We don’t really have any option. When we embarked on that course of action we had an understanding that we would be penalised.
“We understood the rules, they were quite simple, that if we raised council tax we no longer get the council tax support we got from the Government.
“We took that into account, we did our sums and we came up with a fairly significant rise of 18 per cent, and that was going to allow us to preserve our council services.”
Negotiations have been ongoing between councils and Finance Secretary John Swinney to agree the local authority funding settlement for 2016/17.
Mr Cree said that amid these discussions Mr Swinney had “determined that there were other ranges of measures that they would impose which would result in us not receiving something of the order of £5 million but certainly more than we could have raised by council tax in the first place”.
He added: “The net effect would have been we put up the council tax by 18 per cent, we take £4.3 million in as a result but we would lose more than that amount in the penalties or the withholding of funds that we would suffer.”
Insisting that services in Moray would be protected, he added: “We were at the blunt end of a very big stick and it just became no longer a tenable option.
“I feel that the administration of Moray Council has not been able to operate or exercise its democratic will. I think that the people of Moray have been denied that opportunity.”
He called on Mr Swinney to “finally make good” on the reform of local government funding.
The Commission on Local Tax Reform, set up by the Scottish Government, recommended last month the current council-tax system should be scrapped and alternatives put forward to voters at the Holyrood election in May.