The SNP has revealed it has no plans to bring forward a 15-year-old commitment to reform council tax until at least 2026 despite its partners in government believing the charge is “not fit for purpose”.
Experts have warned the current Holyrood term is now likely to be one without any major tax reform after the SNP Government previously ruled out any overhaul to Scottish income tax and land and buildings transaction tax.
Reforming council tax was promised by the SNP back in 2007 but plan have yet to materialise.
Now, a Scottish Government finance minister has admitted that any reform of a new system of council tax will not be rolled out until at least after the next Holyrood election in 2026.
Council chiefs have long called for the system to be overhauled as well as the overall funding systems for local authorities – but have been left ”disappointed” by the further delay.
In the SNP’s manifesto ahead of last year’s Holyrood election, the party acknowledged it is “committed to reforming council tax to make it fairer”.
But SNP Public Finance Minister, Tom Arthur, has now admitted the plans are set to be prolonged – with the reforms not expected to be tabled until at least 2026.
A citizens’ assembly will be set up to investigate the potential options for replacing or reforming council tax after the Scottish Government’s plans.
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Mr Arthur told MSPs that he cannot give “a concrete timescale” for reforming the tax, but added that it remains “a key priority” for the Scottish Government.
The minister admitted that there are “a range of options” that could be drawn up – ranging from “relatively minor changes” to “significant and fundamental reform”.
But Mr Arthur acknowledged that the plans to roll out any new system to replace or tweak council tax will not happen before 2026.
He said: “We recognise that there is a process of legislating and a process of implementation, and that going from where we are now to a fully embedded and operational new system would go beyond the lifetime of this session of Parliament.
“However, the commitment in this session is to do the groundwork at pace to establish the citizens’ assembly and allow it to be able to report back to parliament in sufficient time so that parliament can consider its response.”
John Cullinane, director of public policy at the Chartered Institute of Taxation, said: “The Scottish Government say they are committed to reforming council tax but they certainly seem to be taking the slow road to getting there.
“With Scottish ministers having already ruled out major changes during this parliamentary term to two of the main taxes under their control – Scottish income tax and land and buildings transaction tax – it looks increasingly like this will be a tax reform-free parliament.
“A citizens’ assembly on council tax reform will allow a range of opinions to be heard and it is welcome that the Scottish Government is committed to consultation and engagement. But the Scottish Government needs to set out what it wants from reform too.”
Mr Cullinane has stressed several options are available to reform council tax including a fully proportional system where householders pay a set percentage of the value of the property or ensuring those in higher bands pay a larger share of the charge.
He added: “The options for reforming council tax are wide-ranging. You could keep the existing band-based system, but based on up-to-date valuations. You could change the formula so that higher bands pay a higher proportion of the tax – though this has already been done in 2017.
“More radically you could make the system fully proportional so you paid a percentage of your property value each year – slightly over half a percent would be revenue neutral. You could adjust that system so there was an allowance – perhaps you wouldn’t pay it on the first £10,000 of your property’s value. This has been advocated by the Scottish Greens. You could even have multiple tax rates so those living in higher value properties pay a higher percentage of their value each year.
“What all of these more radical proposals have in common is they take a higher proportion of the tax take from people living in more valuable homes. That seems the likeliest direction of travel for any reform, given the Scottish Government’s stated aim of reforming council tax ‘to make it fairer’.
“It is of course open to the Scottish Government to shift between different taxes, perhaps raising less with council tax but making up the difference with an income tax increase, or cuts to spending, but we don’t see any sign of appetite for these.”
A Cosla spokesman said the organisation was “disappointed” with the extended timescale.
He added: “Cosla is in favour of a reform of the council tax and the development of local taxation, but given this announcement, we will now raise this through our joint work with government on a fiscal framework – the rules around our funding relationship with Scottish Government.”
The Scottish Greens, in their manifesto stressed they “will seek to replace it with a new residential property tax that is related to actual value rather than outdated valuations”.
But Mr Arthur has now said that “is not our policy to have a revaluation of council tax at this time”.
Scottish Greens finance spokesperson, Ross Greer, said: “The council tax is not fit for purpose.
“It is unfair and outdated. That’s why the co-operation agreement that brought the Scottish Greens into government commits to a Citizens Assembly process which should lead to its replacement.
“Scrapping and replacing council tax will be a challenging process and it will inevitably take some time, which is why the government are getting the ball rolling as soon as possible."
Scottish Labour’s local government spokesperson, Mark Griffin, said: “This is symbolic of the SNP’s utter failure over the last 15 years.
“A decade and a half on, the SNP is still failing to deliver on the promises that first got the party elected.
“It is clear that the SNP has no real commitment to ever delivering on this promise. Scottish Labour would abolish the council tax and replace it with a fairer alternative based on property values and ability to pay.
“After a decade and a half of cuts to local government, Labour is the only party that stands up for empowered and properly funded councils.”
Scottish Conservative local government spokesperson, Miles Briggs added: “The SNP have been promising these reforms for 15 years, yet they are still nowhere near delivering them.
“In fact, Tom Arthur admitted that the SNP are only now starting to lay the ‘groundwork’ for building any consensus on this key pledge.
“It is essential that our local councils receive fair and adequate finding in order to deliver vital public services – and the Scottish Conservatives will consider any proposals that aim to do so, while standing up for taxpayers.
“However years of systematic SNP centralisation and underfunding of our local authorities will have left the public with little trust that the SNP will deliver fair or effective reforms.”
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