Hansard

I need to make some progress.

Perhaps with the exception of the Conservatives, we all recognise that the present system, as defined in an act that was passed in 1992, is not fit for 2015. Our 2011 manifesto committed us to

“consult with others to produce a fairer system based on ability to pay to replace the Council Tax”

and to

“put this to the people at the next election, by which time Scotland will have more powers over income tax”.

That is why the First Minister’s statement on the Scottish Government’s programme for government last November set out that we would establish an independent commission to examine fairer alternatives to the current system of council tax, to be advanced in partnership with local authorities, and with all political parties invited to be involved. That is why we accepted the recommendation of the Local Government and Regeneration Committee’s inquiry report, “Flexibility and Autonomy in Local Government” from last summer, to establish a cross-party commission. To that end I am happy to accept Alex Rowley’s amendment, which gives due recognition to the work of that committee.

The first steps in establishing the commission reflected our continuing partnership with local government; we found it to be fully supportive. It proposed joint chairing by the Convention of Scottish Local Authorities and the Scottish Government. Those chair roles have now been taken by me and Councillor David O’Neill, who is the president of COSLA.

Our invitation to the other parties to participate in the commission duly followed through a joint letter from me and Councillor O’Neill inviting each of them to discuss a potential remit and membership. I am grateful to Willie Rennie, Alex Rowley and Patrick Harvie for contributing to the early discussion. That early discussion allowed a proposed remit to be refined and developed, and we were happy to take on suggestions. A number of key organisations that could contribute were identified from outside the world of politics. I record my sincere thanks to Citizens Advice Scotland, the Joseph Rowntree Foundation, the Chartered Institute of Public Finance and Accountancy, the Law Society of Scotland and the institute for society and social justice research as well as the political parties and the independent group in COSLA for all agreeing to nominate representatives for the commission. We met for the first time on Monday this week.

The commission that we have now established, which will be independent of the Scottish Government and COSLA but will report to both, brings to the process many strong voices, differing perspectives and experiences, as well as analytical rigour. On the basis of that first meeting earlier this week, I am confident that the membership has the right mix of skills and knowledge, as well as immense enthusiasm, to tackle the task that it has been set.

That brings me to the remit that has been agreed by everyone who is participating. The commission is being asked to examine alternative systems of taxation to support funding of local government services, with a range of what will, in effect, become tests to apply, covering inequalities, macroeconomics, administration, transition, democracy and scale.

In conducting its work, the commission will engage with communities across Scotland to assess public perception of the emerging findings and to reflect that evidence in its final analysis and recommendations. The commission is not being asked to make a specific recommendation, although it is perfectly entitled to do that if it reaches a particular view. Rather, we envisage that its work will be to develop a profound understanding of all the potential systems.

It is unimaginable that the next Scottish Government—of whichever party or combination of parties it is—will have a policy of maintaining the existing council tax as set out in the Local Government Finance Act 1992.

The commission will help us all to understand what the alternative propositions are, what they would mean and whether they would be politically viable. The evidential approach that will be taken by the commission will provide the basis for the alternatives to be more thoroughly developed and informed than they would be otherwise, and for them to be calibrated against public opinion. The work of the commission will mean that the appropriate knowledge will be in the public domain to allow policy options to be challenged and validated.

We have to be realistic, though. Perhaps we have all been missing something, but my expectation is that there is no perfect solution. There is probably not going to be one that everyone will look at and say, “Yes—that’s the tax that I’m happy to pay. Let’s do it.” The real world is about trade-offs. The work of the commission can allow us to understand the trade-offs and allow policy to be developed to address them. We may well make different choices: instead of thinking that the commission will deliver one main course, perhaps we should expect it to give us a menu from which we can all choose, in the knowledge that all the options have been rigorously tested.

In addition, the commission will look at international practice to see whether there is anything we can learn from abroad and apply to our system here. Furthermore, the work of the commission can provide an administrative route map for implementing alternatives. That is key because, whatever is wrong with the council tax—I have gone into that at great length—it delivers £2 billion of funding for public services. Whatever replaces it must be capable of doing something similar.

With that £2 billion going on funding the staff and workforce who deliver vital services that have to be planned years in advance, we would benefit from revenues being stable and predictable. We cannot afford a future change that introduces unmanageable revenue risks. Equally, the people of Scotland cannot afford a change that exposes them to unfair or unanticipated tax liabilities. That is just one of the real-world trade-offs that it will be for the commission to wrestle with.

Council tax is fundamentally of profound importance to so much of our lives in Scotland—to so many of the services that we deliver. Its replacement must deliver financial accountability to local government and transparency to the more than 2 million households that currently pay council tax.

Council tax today is visible. Aside from income tax that is paid by self-assessment and vehicle excise duty, it is the only tax that we must actually make an effort to pay. Every other tax is collected at source by employers and by providers of goods and services.

As I have set out, however, it is a flawed system. For those reasons, I am delighted that opposition parties and many civil society groups recognise the importance of this work.

I hope that parties in the chamber, in addition to showing their support by participating in the commission, will also show their support by voting in support of the motion in my name later this afternoon.

I move,

That the Parliament supports the establishment of an independent cross-party commission to examine alternatives to the council tax; welcomes this being undertaken jointly by the Scottish Government and local government; endorses the remit as set out in the response to question S4W-24542, and looks forward to its report in autumn 2015.