Scottish Labour unveils property based levy to replace ‘unfair’ council tax

Kezia Dugdale
Kezia Dugdale

A new form of local government tax based on property value will replace the “unfair” council tax under new plans revealed by Scottish Labour.

Party leader Kezia Dugdale, who also proposed a tourist tax and a tax on vacant, economically inactive land, said the tax would make 80 per cent of households better off.

The SNP’s own planned reforms, unveiled earlier this month, pledged to end the council tax freeze from 2017 and raise the four highest bands to generate funds for services.

Ms Dugdale said Labour would “make good on the SNP’s broken promise and scrap the council tax”, basing her plans on the Commission on Local Tax Reform.

She said: “We will fix the funding of local services for good. It’s a fair plan which means millions will pay less and those who can afford to will pay a little more.

“The SNP commissioned a report into replacing council tax and then bottled it when it was time to be radical. We have taken that report, and its research, and voters can now choose a fairer alternative to council tax.”

Under the proposals, properties worth £180,000 or less would be taxed £450, plus 0.35 per cent of the property value.

For properties worth more than this, the portion of the value above £180,000 would attract a rate of 0.9 per cent of the property value.

The maximum charge would be capped at £3,000, with a cap on year-on-year increases at 3 per cent.

Labour said this would leave nearly two million households better off, with 80 per cent paying less than they currently do.

The party’s plans involve carrying out a revaluation of properties in Scotland, costing £8.5m, which the SNP decided against in its proposals. The last valuation was carried out in 1991.

David Melhuish, director of the Scottish Property Federation, said: “The last valuation of Scottish residential properties was carried out in 1991 so in our view a revaluation is long overdue.

“We believe council tax revaluations should be undertaken regularly to keep the tax base relevant. The SPF has long advocated that introducing more bands at the higher end of the system would help to make the council tax system more proportionate, particularly if a fairer system of contribution by each band can be introduced.

“Such reforms could be easier to administer than more complex measures which would seek to charge residents a percentage based on their differing property values.”

Scottish Conservative leader Ruth Davidson said the plans would “tax Scotland back to the 1970s”.

She said: “Scottish Labour has become the enemy of aspiration. Going into this election, we have a government promising to put up taxes and a main opposition party saying taxpayers should be hammered even harder.

“Only we are standing up for Scotland’s workers.”

The Scottish Greens, who are to publish their own council tax reform ideas next week, said Labour’s proposals were “welcome”, but questioned the £3,000 cap.

Local government spokesperson, Andy Wightman, said: “It’s also concerning to see Labour proposing to cap the powers of councils to set the rate of property tax when what councils need is greater fiscal freedom to strengthen local democracy and accountability.

“We need a fairer system of funding for our local services, and that must include up to date evaluations of property values.”

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