Tax wars!

Ooh.  How appropriate that the opening salvo of the Scottish elections has been on tax.  Glasgow City Council stuck its head above the parapet, demanding the right to raise council tax next year.  The Scottish Government has accused it and Labour of wanting to hurt hard working individuals and families.  So far, so drearily familiar.  But is there light to be found in these opening shots of what is bound to be a long and bloody battle?

1.  The wheeze:  or how councils have been quids in as a result of the freeze.  £70m per year amounts roughly to a year on year council tax increase of 3.8%.  How many councils would have raised tax by that amount, every year since 2007?  Probably very few.  So councils have gained more from the freeze in income through additional government grant than they would have raised themselves from increasing council tax.  Nice.

2.  The sting:  or how councils want their cake and to eat it.  Glasgow City Council is looking to keep its current additional grant of about £8m AND have the right to raise the council tax.  Its esteemed leader on Newsnicht tonight suggests by 3%.  So councils would still get their extra £70m but also raise a further £55.7 million.   The point of which is to reduce the level of cuts required next year.   Sounds good in theory but there’s just something about this that makes me feel uneasy.

3.  The alternative:  or how we could attempt to make council tax progressive.  Is there anything to prevent a targeted increase?  Even if current legislation doesn’t permit it, surely Parliamentary time could be found to revise the legislation.   An increase could be applied only to the highest bands;  in fact, more bands that better reflect the top end of the housing market, could be added at the same time.  Call it Jack McConnell’s swansong….  But it would mean those living in the lowest banded housing, and therefore likely to be on the smallest incomes, are more likely to be protected against increases.  Universality is all very well but it doesn’t pay the bills.

4.  THE SOLUTION!  or how about councils just collect all the tax due to them.  A radical idea, but hear me out.  According to the Accounts Commission (I know, I know…. mebbes aye, mebbes naw) in 2008-09 all councils collected over 90% of council tax due for the first time.  But half also reported lower collection rates than in previous years.  So there’s 10% of available tax revenue currently languishing down the back of the sofa (including Glasgow!).  Which the burd reckons amounts to £185.7 million.  Yes, you read it right.  £185.7 million.  Way more than a 3% increase would raise. 

Oh, and while we’re at it, let’s make sure everyone who is entitled to council tax benefit, is helped to claim it.  That way, councils won’t be turning the thumbscrews on folk who can’t afford to pay, and who shouldn’t be paying.   It’s so clever, it’s genius, especially when you realise the additional benefit money would come from Westminster and not the Scottish budget.

5.  The indignity:  or how did it come to this?  The prospect of months of the SNP and Labour squabbling over whether to raise this most unfair and blunt of tax instruments is deeply depressing.  The failure of the Liberal Democrats to support SNP plans to introduce a local income tax is yet another blot on their copybook.  But a plague on all their houses frankly for the ultimate failure of our Parliament, and all its members, to use the powers and opportunity of devolution to start moving Scotland to a fair, representative and progressive tax regime.

In fact, while we’re on the subject, do any of them remember they actually have other tax varying powers?  As well as the power to introduce new taxes such as on land value or tourism.   Is it too much to hope for an honest, open, mature and intelligent debate on how as a nation, we could raise more income to offset the worst of the cuts?  Probably.

(For anyone who share’s the burd’z passion for impenetrable jargon, policy and stats, go find the Scottish Government’s local government finance circular 2010-11 and the Accounts Commission’s annual report 2008-09.  All the figures quoted can be discerned from these two documents.)

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  1. Pingback: Ian Gray has called it wrong on council tax « A Burdz Eye View

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