In scrapping the discredited council tax, we can support a shift from taxing income to taxing wealth.

High quality public services are the bedrock of our society. In recent years they’ve taken a battering but we have an opportunity to start rebuilding them. I believe there’s a way for Scotland to properly fund its public services while also tackling inequality.

With Holyrood getting new powers over income tax rates and bands there’s an opportunity to level the playing field, and allow those on lower than average incomes to keep more of what they earn, while asking those on higher than average incomes to pay a fairer share.

At the same time there is an urgent need to reform local taxation. Even the Scottish Government’s poverty adviser, Naomi Eisenstadt, has said that bold reform of local tax should be a priority. Of course, for some, tax is a dirty word. It is a “burden”. But it’s a not a word I’m afraid to use.

Taxes should be fair. Taxes should be efficient, easy to administer with high collection rates and minimal avoidance. Taxes should be transparent. Taxes, when they change, should be phased in so that people are not subject to sudden rises and falls. And above all, taxes should enable local fiscal freedom. We have a fiscal “framework” between Holyrood and Westminster. Why not one between Holyrood and local government? Councils should have the freedom to set rates and to adapt elements to suit local circumstances.

The Scottish Parliament has always had the power to redesign the local tax system, but change has been put off for too long. I represented the Scottish Greens on the Commission on Local Tax Reform. We agreed that the Council Tax is outdated, discredited, strikingly unfair and must go. Despite this, the SNP have ducked the chance to abolish it.

Under the current system the most expensive homes pay only three times that of the least expensive, despite being worth on average 15 times more. A property tax is fairer since the tax is more closely related to the actual value of each home.

Greens propose to abolish the Council Tax and replace it with a Residential Property Tax based on the value of the property, with a £10,000 tax-free allowance and relief for households on low and precarious incomes. There would be a five year transition period and options to reduce or defer payment in cases of hardship. Property taxes provide a stable and predictable source of revenue that is hard to avoid. Well-designed land and property taxes can help to moderate house prices and increase housing affordability as well as reduce wealth inequality.

The SNP has said its plan to keep the council tax is “credible and progressive”. Let’s not forget this a tax based on values from 25 years ago and most properties are in the wrong band!

So how much would you pay under the Greens’ proposals? Well, the precise tax rate would be set by local government to fit local circumstances, but in general, a Residential Property Tax rate of around 0.7 per cent would raise the same amount as the current council tax. After 8 years of the council tax freeze and corresponding cuts to local services, Greens believe it is time to raise additional revenue. A rate of one per cent would raise £490m more in today’s prices after the transition period.

A majority of households would pay less; higher value properties would be likely to pay more.

Our proposals represent a significant step towards our long-standing policy of a land value tax, as the bill for each property would be split to show the value of the building and the land on which it sits. Denmark already operates such a system.

We favour a land value tax as it captures the value created by the community, incentivises productive land use, penalises speculation and encourages the improvement and upgrading of property with no fiscal penalty.

This year’s Green MSP proposals for the 2016/17 budget and Land Reform legislation included a tax on vacant land. This could still raise roughly £250m a year. Green campaigning resulted in a Scottish Government commitment to consult on this.

In tackling the discredited council tax, we can support a shift from taxing income to taxing wealth. This approach is advocated by economists such as Thomas Piketty and by the OECD. Wealth inequality is growing faster than income inequality and is a more structural form of inequality that affects future generations.

Sadly, the powers devolved to the Scottish Parliament do not cover sources of wealth typically associated with the wealthiest in society: stocks, shares and large amounts of private pension wealth. But let’s not limit our ambition. Let’s be bold and make maximum use of the capabilities we fought so hard to have devolved.


Andy Wightman is Local Government and Land Reform spokesperson for the Scottish Greens and MSP candidate for Lothian region