David Alexander: Council tax column

28th Jul 2023
David J Alexander

In his latest column for The Scotsman, David Alexander discusses the proposed overhaul of the council tax system:

House prices were originally assessed for council tax in 1991 and were assigned a rateable value at that time and these prevail even after 30 years. However, this has meant that houses built since the original valuations often have a higher council tax charge than those built previously despite the older properties often being higher in value. This review’s stated aim is to equalise the system and charge more to higher band taxpayers than those in the levels between A and D.

However, the proposal has been widely criticised as being both piecemeal and ill-thought-through. While many agree that the system does require an overhaul, simply applying random increases to certain bands is both selective, unfair, and untargeted.

The proposed increases are certainly substantial but would result in ordinary homeowners being hit by huge increases alongside their wealthier counterparts. If implemented, the plans would see council tax for homes in bands E, F, G, and H increased on a sliding scale of 7.5%, 12.5%, 17.5%, and 22.5% respectively.

It is estimated that 28% of properties in Scotland are believed to be in the bands that would be impacted, but only 0.5% of them are in the highest council tax band.

This new scheme would be both unfair to those who have newer properties who would see themselves pay more for a property currently valued at less than a pre-1991 home and also place Scots at a disadvantage compared to their English counterparts.

Much more expensive homes in England would be charged less council tax than in Scotland resulting in normal workers in Scotland paying more compared to their millionaire neighbours south of the Border. Recent analysis found that while homes in England may be worth ten times more than those in Scotland the council tax will be higher north of the border.

You don’t have to look far at properties on sale to find that these council tax increases would severely impact on ordinary people across Scotland. In Motherwell there is currently a house for sale at offers over £184,995, a £210,000 home in Bellshill, and a £215,000 in Pilrig Heights in Edinburgh, all of which are in band E and would experience a 7.5% increase in council tax under these proposals.

Clearly these are homes bought by ordinary people who will find their bills rising disproportionately at a time when the cost of living is already having a severe impact on property affordability. These are the homes bought by nurses, bus drivers, office workers, the police, and many others yet they are described as being the homeowners with the broadest shoulders who must pay a higher burden of taxes.

We need to attract more people to come and live and work in Scotland yet when they arrive, they will find that property taxes to buy, and then to live in a home are substantially greater than the rest of the UK which could act as a major disincentive to those seeking to relocate here.

This proposal feels like an afterthought and a quickly produced piece of work aimed at raising some desperately needed funds. What we need is considered thinking on how we tax property purchases and property ownership to ensure that Scotland is as competitive as it can be enabling us to attract the brightest and the best to grow our economy in the future. Unfairly taxing homes worth £185,000 and above seems to be a regressive step at a time when people need as much support as they can get.