Local authorities label council tax reforms 'damp squib'

Council tax reforms that will see residents in the four highest bands pay more will not deliver meaningful change, local authorities have said.

The Convention of Scottish Local Authorities (Cosla) said Nicola Sturgeon's plans for higher charges to bring in an extra £100 million a year for schools were a "damp squib" and a "missed opportunity".

The First Minister and SNP leader was also accused by Labour of breaking 2007 and 2011 manifesto promises to abolish the council tax in favour of "tinkering round the edges".

Under the reforms, the average Band E household will pay around £2 more per week from April 2017, with those in the highest band paying an extra £10 a week - an average of £517 a year.

The council tax freeze will also end at the same point, with local authorities able to increase the charge by a maximum of 3% a year, potentially raising up to £70 million for local services.

The Government will also consult with councils on the possibility of swapping a fixed share of their grant for a proportion of funds raised by income tax.

Ms Sturgeon confirmed there are no plans for a revaluation of the council tax, which remains based on 1991 property values.

The changes follow a report by the Commission on Local Tax Reform which last year called for an end to the council tax and urged politicians to implement a fairer, more progressive and transparent tax to fund local services.

The Scottish Government's response was immediately criticised for not being radical enough.

Cosla president David O'Neill said: "I am saddened that yet again we have an offence against local democracy, local decision making and local choice.

"I am particularly angry about the cap, the central direction of spend, we still have valuations over a quarter of a century old and no mention of local discretionary taxes.

"They have completely ignored the good work and recommendations of the Commission on Local Tax Reform.

"Having served on this commission in good faith, I am embarrassed about today's proposals, as must be the Local Government Minister. What we have before us today is a damp squib."

Scottish Labour's public services spokeswoman Jackie Baillie said: "Nicola Sturgeon has broken the promise she was elected on.

"The SNP promised to abolish council tax back in 2007 and attacked Labour's proposals to change the way banding worked. Yet that is exactly what the SNP Government has announced today. It has taken the SNP a decade to deliver tinkering round the edges rather than real reform."

Scottish Conservative leader Ruth Davidson accused the SNP of "incredible hypocrisy".

She said: "After spending years flirting with a local income tax, calling the council tax 'hated' and making endless complaints about it, Nicola Sturgeon has now decided to keep the formula intact, but just put in a few tweaks.

"In fact, the SNP's basic approach today mirrors the proposals put forward by the Conservatives' independent tax commission published in January."

She warned the Scottish Government against giving Scotland a reputation as a high tax country, in light of the recent stamp duty replacement LBTT.

"The result will only be to damage the economy and cut the tax revenues which pay for our school and hospitals," she said.

Ms Sturgeon dismissed concerns that the reforms would make Scotland a less attractive place for the better off, pointing out that households will still on average pay less than those on equivalent bands in England and less than had the council tax freeze not been in place.

Three-quarters of Scottish households living in bands A to D will be unaffected by the changes, while 54,000 homes living in bands E to H on low incomes will be entitled to an exemption.

Extra support will also be available for low-income families across all bands with a 25% increase in the child allowance within the council tax reduction scheme, benefiting 77,000 households by an average of £173 per year.

Speaking at Lasswade High School in Bonnyrigg, Midlothian, the First Minister said: "We need to make sure that we have tax changes that are fair, reasonable, measured and introduced for a purpose. That is what I'm setting out today.

"I'm asking people in the most expensive houses in the country, those in the top band, will pay a significantly increased portion in council tax and also taking steps to make sure those on the lowest incomes with children will pay less in council tax, paving the way then for a more substantial reform in terms of what we've said around income tax.

"I think this is the right way forward, I think it's fair and it's balanced and I think it will meet with approval of people around the country."

She added: "The commission made very clear that if we were to do a revaluation there would be changes to the amount paid by the majority of people across Scotland, some of those would be very significant and dramatic changes and my judgement is that that's not the right thing to do at this stage."