‘Highest council tax bands will pay more’ - Sturgeon

People living in Scotland’s four highest council tax bands are to pay more under new proposals put forward this morning by the Scottish government.

During a visit to Lasswade High School Centre, First Minister Nicola Sturgeon set out in detail how the Scottish Government will build on the recommendations of the cross-party Commission on Local Tax Reform.

Under the proposals, the average band E household would pay about £2 per week more, and the average household in the highest band about £10 a week more.

First Minister Nicola Sturgeon said the move would raise £100m a year for education.

The council tax freeze will also come to an end in 2017, with councils able to increase local taxes by up to 3 per cent.

The plans will be introduced if the SNP is re-elected on 5 May.

Council tax bills have been frozen in Scotland since 2007.

The 75 per cent of Scottish households that live in bands A to D would be unaffected by the changes.

A further 54,000 households living in bands E to H on low incomes - more than one third of which are pensioner households - would be entitled to an exemption from the changes through the council tax reduction scheme.

The reforms would also provide additional support to families on low incomes across all council tax bands.

This would be by extending the relief available to households with children, which the Scottish government said would benefit 77,000 low income families by an average of £173 per year and support an estimated 140,000 children.

The government said the changes it had proposed would ensure that bills in every band were lower than they would have been had the freeze not been in place.

Across Scotland, average rates in all bands will remain lower than the average in England, it added.

Ms Sturgeon said: “Over the past eight years, our council tax freeze has helped households across the country, keeping bills affordable during difficult economic times while ensuring that councils receive the funding required to provide the services people need. The council tax freeze will remain in place for 2016/17 - a ninth consecutive year.

“However, the Commission on Local Tax Reform made clear that the present system could be made fairer. We are choosing to do this in a reasonable and balanced way that will also generate £100 million of additional revenue to invest in schools.

“These reforms to council tax bands will mean no change for three out of every four Scottish households, with those in lower banded properties paying no more than they do now.

“Households will also still, on average, pay less than those on equivalent bands in England and less than they would be paying had the council tax freeze not been in place.

The First Minister added: “In responding to the Commission, we have also heard demands for local authorities to be more responsible for their own finances and be less dependent on grants from central government, but without adding to the burden on households.

“As part of our proposals, from April 2017, we will replace the council tax freeze with discretion for councils to increase tax - if they so choose - by a maximum of 3 per cent a year. This will see councils be more accountable for raising revenue, while ensuring that the rapid and significant rises we saw in the past do not return.

“Importantly, to ensure the contribution individuals make to the delivery of local services is more closely tied to their earnings, as well as to incentivise councils to support economic growth, we will formally consult local government on the assignment of a portion of the devolved income tax raised in Scotland to councils, reducing their reliance on grant funding from central government.

“Overall, these proposals will protect household incomes, support investment in our schools, make local taxation fairer and ensure local authorities continue to be properly funded while becoming more accountable.”

Sarah Speirs, director of Royal Institute of Chartered Surveyors in Scotland, said: “We welcome the Scottish Government’s announcement that the local tax system of domestic property will remain property based. RICS believes that a regularly updated property-based taxation system is the simplest and most effective way to fund local services as the fixed nature of property facilitates collection and hinders concealment. Furthermore, with the onus to pay being on the occupier, and not the owner, the collection rate is high, with the administrative costs being relatively low.

“However, we feel that this announcement presents a missed opportunity to introduce a more progressive and fairer approach to local taxation of domestic properties in Scotland.

“We acknowledge the council tax increase in higher bands, and support for those in lower bands, will provide additional revenue; however, further steps can be taken through reviewing current bands and thresholds and revisiting the current, regressive multiplier. Additionally, current council tax bands are based upon valuations from 1991 and we suggest the introduction of statutory, five-year property valuation to ensure bands are align with market conditions.”