Council Tax Hikes May Be Overdue, But They Seem Unlikely To Bail Out The Scottish Government

15th July 2023

Henry Hill at conservativehome web site comments onthe SNP proposals to raise council tax for bigger houses bands E to H.

One of the ways in which devolution has actually served to undermine genuinely local government in Scotland has been the Scottish National Party's sustained squeeze on the autonomy of councils.

Politically, it was a good wheeze. The Scottish Government would woo voters by holding down council tax levels, and then top up (some of) the lost revenue from central funding.

The crucial difference was that local authorities had discretion over how they spent council tax receipts, whereas the Scottish Government dictated the terms of central funding. (Proving once again that the devocrats are savvier than their counterparts at Westminster, who simply hand over British funding no questions asked.)

Years ago, the battles this produced between the SNP and the Convention of Scottish Local Authorities (COSLA) were a frequent feature of this very column.

But that freeze came to an end a few years ago, amidst mounting pressure to fund the Scottish Government's various expensive ambitions/failures. Now the Daily Telegraph reports that the SNP is considering an "eye-watering" council tax hike for middle-class Scots:

"On Wednesday, the Scottish government published a consultation on plans to drastically increase council tax bills for around 750,000 households, affecting those who live in more expensive homes. The SNP said the changes were needed to make sure that Scots paid their "fair share" towards funding public services.

"Under the proposals, those in the top four of eight bands would pay more council tax, with bills rising by 7.5, 12.5, 17.5 and 22.5 per cent for those in bands E, F, G and H."

The move has, naturally, been sharply criticised by the Conservatives, coming as it does in the midst of a cost-of-living crunch and in light of the fact that the Scottish Government has not passed on its own revenue increases to councils; as the paper reports:

"Figures show that while the SNP government's revenue budget has risen by 8.3 per cent over the last decade it has not passed on the increase to councils, whose funding has gone up by just 4.3 per cent."

But in the broader context of the housing crisis, it is difficult for me personally to get too het up about an increase in council tax, one of the very few ways the tax system has for reflecting people's housing wealth. Especially since even the increased bands are still letting people off very lightly in one crucial respect: the first line of the Scottish Government's online guide explains that your band is "based on the value of your property on 1 April 1991".

There is the broader question of whether it will actually help. After all, the Scottish Government's last set of tax hikes actually risked being a net revenue loss. This year, the chair of the Scottish Fiscal Commission warned that tax increases may not yield significant revenue.

However, council tax might be better able to avoid this fate. Part of the problem is that Scotland has a relatively small number of top-rate taxpayers and that moving around inside the United Kingdom is very easy. But it's much harder to move a house.

Politically, however, the danger is that the SNP end up running into the same "sh*t-state" problem as the Tories have, with sky-high taxes partnered with poor public services. It certainly doesn't seem likely to do much for Humza Yousaf's already woeful poll ratings.

Read the full article HERE

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