COUNCILS should be empowered to devise new taxes, and have unfettered control over business rates and council tax once more, according to a leading Scottish thinktank.

In a manifesto aimed at generating debate before the May 4 local elections, Reform Scotland will call for “radical reform” of how local government is financed north of the border.

The non-party group warns local democracy is being eroded by central government, which currently has more say over local taxation than elected councillors.

Previously set locally, business rates have been set by central government since 1990, while council tax has effectively been controlled by ministers since the SNP came to power in 2007, first through a freeze, and then through a 3 per cent cap on rate rises.

Between them, business rates and council tax raise around £4bn a year for authorities.

Arguing such central control is “causing a loss of faith” in local politics, Reform Scotland’s Blueprint for Power advocates council tax and business rates be devolved in full to councils.

In addition, councils should be able to levy new taxes, such as a nightly ‘bed tax’ on tourists of the kind common across Europe, or scrap existing taxes, to suit local circumstances.

Taken alongside income from housing and business rents, sales and fees for council services, the thinktank estimates councils should be able to raise around half their budget, with the rest coming from central government grants.

Reform Scotland director Geoff Mawdsley said: “Local democracy in Scotland is severely constrained because councils have insufficient power to do what they would like to do and are, therefore, not genuinely accountable to local voters.

“In large part, that is because local authorities have almost no control over local taxation.

“If we truly believe that decisions should be made closer to those whom they affect, then we need to rejuvenate local democracy.

“Further, we want local authorities to have the ability to introduce new taxes, such as a bed tax, or scrap existing ones, including council tax and business rates. Local authorities are in the best position to ascertain what they would like their overall tax take to be, and they also know how best to achieve that.

“The key point is that it should be up to the people we elect next month to run our councils to decide how much, and how, we should be taxed in order for those councils to be run. If voters don’t like how they decide to do it, then they can remove them, just as they can at Holyrood or Westminster. That’s real democracy.”

The council umbrella body Cosla has long campaigned for maximum local control over taxes.