Hansard

This debate has been bedevilled by claims that we must keep an out-of-date, archaic, regressive tax because we cannot agree on what should replace it. If we are to get rid of that logjam, we should agree to get rid of the council tax and, as our motion suggests, have an implementation group come up with an agreed system for the future.

That is why, at budget time this year, my colleague Patrick Harvie made clear that the Scottish Greens will be unable to enter budget negotiations for 2019-20 unless meaningful progress has been made on local tax reform. He wrote to the First Minister outlining short, medium and long-term options and making clear that negotiation between the parties will be necessary if progress is to be made.

In her response early this month, the First Minister noted a range of initiatives that are under way, including the Government’s tinkering with the council tax, the Planning (Scotland) Bill and the Scottish Land Commission. In other words, she proposed to kick the can further down the road, ignore the commission that she established in February 2015 and wait for more reports, reviews and debates.

Greens are not prepared to wait any longer. We want action that includes as a bare minimum an unequivocal agreement to scrap the council tax. It is a fundamentally bad tax, and I am disappointed that the Government continues to believe that minor tinkering will make the meaningful changes that are needed. In particular, I reject the First Minister’s claim that changes to the council tax have tackled the fundamental regressiveness of the system. I also reject Derek Mackay’s claim in his amendment that the 2016 changes make the council tax “more progressive”. In fact, they make it marginally less regressive, which is a long way short of being in any way progressive.

For the record, I note that taxes can be regressive, proportionate or progressive. Regressive taxes are those where the lower the value of the tax base is, the higher the tax rate—that is the council tax. Proportionate taxes are those where everyone pays the same rate, such as 1 per cent. Progressive taxes are those where the higher the value of the tax base is, the higher the tax rate, as is the case with income tax. The commission’s report showed clearly that the council tax is—and it remains—one of the most regressive taxes in the United Kingdom, in relation to the value of the property and income. The changes that were made in 2016 do not change that.

If members need reminding of that, they can read the report that the Resolution Foundation published last week, “Home Affairs: Options for reforming property taxation”, in which the authors note that someone who lives in a property that is worth £100,000 has

“around five times the effective tax rate ... of someone living in a property worth £1 million.”

The authors articulate the four broad reasons why that is the case. First, the very wide bands mean that properties with widely varying values pay the same tax. Secondly, the fixed multiplier of tax rates between the bands is such that the ratio between bands is far, far less than the ratio of the tax base. Thirdly, property values are more than a quarter of a century out of date. Fourthly, there is huge regional variation. For example, band D properties in Edinburgh are far more valuable than band D properties in Inverclyde.

The Resolution Foundation goes on to argue that, because of its gross regressivity, the council tax looks increasingly like the poll tax, which it replaced, and that its failings are such that the youngest households are hardest hit, because young people increasingly live in properties in the lowest bands.

In her first report, “Shifting the Curve”, Naomi Eisenstadt, the First Minister’s independent advisor on poverty and inequality, urged ministers:

“Be bold on local tax reform”.

She went on to say:

“this is a central moment of political decision, an opportunity to introduce a much more progressive system, one that will have important implications, particularly for working households at or just above the poverty line.”

That moment of political decision was ducked, but now—three years out from the next Holyrood elections—can be that moment. We have the time to begin a process of fundamental reform and to transition to a fair, modern, transparent and flexible system. Instead, the finance secretary and his colleagues routinely turn up to the chamber and committees and tell us that progressivity lies at the heart of their tax plans. With respect to the council tax, progressivity clearly does not lie at the heart of ministers’ plans.

I understand that some take the view that, as Murdo Fraser observed a few moments ago, in the absence of agreement on a replacement, we should not scrap the council tax yet. However, if not now, when? A succession of reports, analyses and inquiries have all said quite clearly that this iniquitous, regressive and archaic tax has had its day. The Lyons inquiry and the Institute for Fiscal Studies said that we should scrap it. The commission on local tax reform said that we should end it. The Organisation for Economic Co-operation and Development is clear that it is regressive and outdated. The Joseph Rowntree Foundation and the Adam Smith Institute have said that we should get rid of it. Why are we not able to agree at the very least that, notwithstanding the various views on its replacement, the council tax must go?

The Scottish Greens bring this debate to Parliament today to make it clear that the status quo is no longer tenable. We are focused on the council tax as a start, but the system of local government finance as a whole is not fit for purpose. We need not only to have a new system of local tax, but to give councils far greater fiscal autonomy and to adopt and agree a fiscal framework to replace the annual arguments about the local government settlement. Just as the Scottish Parliament is maturing as an institution, with new responsibilities for raising public finances, local government should be accorded the same status and the same fiscal freedom that is the norm in countries right across Europe.

Constituents of mine are living in band E properties that are worth less than nearby properties in band B, and the majority of taxpayers are paying the wrong amount of tax, so what conceivable justification can there be for us to do anything other than commit to scrap the council tax? Our on-going inability to deal with the issue should shame this Parliament.

If we are unsuccessful in persuading members to back our call today, so be it, but members should hear this: the Scottish Greens are a party of radical democracy. We believe in the capacity of the local state to organise its own affairs, to be responsible for its own finances and to be accountable to the electorate that it serves. That is why, in the next few weeks, I will launch a consultation on a draft members’ bill to incorporate the European Charter of Local Self-Government into Scots law, which will have implications for what we are debating today.

If we reach no agreement on fundamental reform, my party will not take part in budget negotiations at the end of this year. We reject the idea that we can go on any longer with business as usual.

I move,

That the Parliament believes that the present Council Tax system must end; agrees that its replacement must be a progressive alternative, and calls on the Scottish Government to convene a cross-party implementation group by 31 May 2018.