Scotland needs a ‘more progressive’ local tax system, according to a consultation response which has now been approved by Edinburgh councillors.
The Scottish Government launched the consultation to ask councils how they think council tax should be reformed.
In a response, written up by council officers and amended by councillors, the position has now been agreed that more council tax bands with steeper rates for the highest value properties should be provided for.
Additionally, the response supported a revaluation of properties, and further revaluations happening every five years.
Councillors approved it, after slight modifications, at Thursday’s Finance Committee meeting.
The modifications amounted to calling for council tax bands to be set locally, rather than nationally, as well as calling for further local taxation reform in future.
Finance convener, Mandy Watt, said she hoped the government would take action on the consultation, after a series of false starts on local taxation reform.
Council tax rates work off of the value homes have, with higher values meaning more tax, as well as water and sewer rates – though those two were not covered by the consultation.
The valuations currently in use have not changed since 1991, and a report before councillors at Thursday’s meeting said values had increased in different areas at different rates.
A revaluation would mean the council tax that each property pays would change – with some increasing and others decreasing.
Officers said in the report that, if a revaluation were done under the current council tax system, some two-thirds of homes could go up a band versus 24% across Scotland.
Additionally, only 5% of homes would drop a band, compared to 26% across the country, with more homes possibly seeing an increase if a new model is adopted.
The committee largely supported a model that saw more bands created instead, which has been described as a ‘more progressive’ system.
However, councillors disagreed on how tax bands should work, with some supporting a national set of tax bands while others backed each council deciding their own.
Cllr Alex Staniforth said: “It would be much more progressive, we think, to make it decided on local house prices.”
The Liberal Democrat council group said it supported change to the system, but supported a position of not answering the consultation, saying it was not “holistic or radical enoug”.
Summing up the administration’s stance, Cllr Watt said: “I share people’s disappointment. Marco Biagi, who was a councillor here for some time, he did a huge amount of work on this in the past.
“Lots of consultation with stakeholders, residents, and then nothing happened. Look, this causes huge uncertainty [for property buyers].
“Hopefully, this time, if they say they’re going to do something, they actually do something. Or, quickly decide that they’re not going to.”
Councils get their funding from a mix of sources, including council tax and a grant from the Scottish Government, which includes income from non-domestic rates.
The size of this grant differs by council, in an effort to make sure less wealthy local authorities still get the funding they need to run public services.
Edinburgh draws 25% of its income from council tax – the highest in Scotland – while Glasgow pulls in 15%.
In the most recent Holyrood budget, announced earlier this week, the Scottish Government announced that two new council tax bands would be added.
A new Band I will cover homes from £1m to £2m, and a Band J would cover homes above that, with both coming into effect in April 2028.
However, budget documents state that these new bands do not mean the government is ditching its effort to rework the council tax system.
By Joseph Sullivan Local Democracy Reporter
