Calls for new property tax system to boost council budgets

A new system of property tax and environmental charges should be introduced to boost Scottish council funding, according to a report.

Trade union Unison and the Jimmy Reid Foundation are launching a joint paper on Monday calling for a “fundamental review” of local government funding.

It sets out recommendations of what can be pursued as a means to increase council service spending, including the recruitment of staff to ensure revenues are collected and the introduction of new levies.

Mike Kirby, Scottish secretary of Unison, said: “Over the years, the balance of funding for public services through local government has shifted from approximately 50% coming from national government to 50% being raised directly by local authorities, to 85% of funding coming from central government and 15% being raised directly by local authorities.

“Together with an overall reduction in funding, during a period of austerity, this has resulted in severe financial pressures and impacted upon the quality and delivery of vital public services.

“Politicians in all spheres must create the time and space for a fundamental review of funding local government.

“This report is a contribution to that essential debate.”

Professor Mike Danson, lead author of the report, added: “Within the constraints of the fiscal powers devolved under successive Scotland Acts, there are still some opportunities to generate greater funding for public services locally.

“Some changes will require time to explore, plan and introduce but it is economically efficient and effective to shift the tax burden onto property and land owners and away from council taxpayers, making the tax system more progressive and more based on ability to pay.”

Other recommendations in the report include looking for more effective support for private and social enterprises, while unions should consider how municipalisation of public services could be appropriately pursued as well as how local authority debts can be taken over by the Treasury.

It also says Unison should consider establishing improved research and policy facilities through collaborations with academics and others in the Scottish Trades Union Council (STUC) research network to assist in the above.

An expansion of local public services is possible with a “fairer system” of property taxes and environmental charges, according to the report.

Councils are to receive £11.2 billion in 2019-20 through the local government finance settlement.

This is a “real-terms” increase in both revenue – 1.2% – and capital funding – 21.5% – compared to the previous year.

A total of 20 local authorities have chosen not to increase council tax by the full 4.79% permitted.

A Scottish Government spokeswoman said: “The package of local tax reform measures announced at the Budget will deliver the most significant empowerment of local authorities since devolution.

“We will, this year, formally consult on the principles of a locally determined tourist tax, in addition to supporting a Green amendment to the Transport Bill that would allow councils to choose whether they wished to introduce a workplace parking levy.”

A Cosla spokesman said: “Cosla has long said that the current model is not sustainable. We reiterated this point in our essential services campaign.

“Undoubtedly there is a funding issue for local government and we are happy to engage in any debate that gives us more funding and flexibility to deliver essential services for our communities.”

The paper is being launched at the STUC’s 122nd Annual Congress in Dundee.