The Convention of Scottish Local Authorities (COSLA) has published calls for a raft of new taxation powers in its submission to the Commission on Local Tax Reform. The organisation, which represents most of Scotland’s 32 councils, agreed on the submission during COSLA’s summer convention.
Addressing fiscal deficit
One of COSLA’s core arguments is that “effective local tax reform is key to addressing Scotland’s local fiscal deficit”. In particular, the group advocates wide-ranging council tax reform. This would involve removing the council tax freeze introduced by the SNP in 2008, which has cost a cumulative £2.5bn.
COSLA also suggests that council tax bands should be widened by the addition of new bands at the top and bottom of the scale, and that properties be revalued every five years to ensure that council tax accurately reflects their value.
As well as solving the widespread problem of fiscal deficit, COSLA contends that the increased powers would “allow for local flexibility, empowering local authorities to raise local funding for local priorities.”
Currently, councils raise 18% of their £10bn budget through council tax, but COSLA contends that 50% of the budget should be raised locally. This would be achieved by giving councils the power to set business rates, and to be able to “raise additional income by levying a tax… on either residents, occupants, property owners or visitors in the local authority or within a discrete area of the local authority.” In other words, setting local taxes independently of central government.
The COSLA submission also emphasises that the “intention is not to increase taxes, it is simply to empower local government to set and raise taxes that are suitable to the needs of the local community where there is clear local mandate to do so.”
COSLA is confident councils will receive public support due to Ipsos MORI opinion poll findings suggesting that 71% of people are willing to pay higher taxes if the money's spent on local services.
From our perspective, enforcing tax payments in such situations will represent a significant challenge. It will require sensitive handling and local knowledge to ensure devolved powers retain support and understanding.
The Commission on Local Tax Reform is due to complete its report on a ‘fairer local tax system for Scotland’ by September 2015.
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