The Scottish Government has announced the remit and membership of the Commission on Local Tax reform. I am very pleased to have been nominated as a member of the Commission on Local Tax Reform and look forward to meeting the other Commissioners on Monday at our first meeting.

The Commission will be co-chaired by Local Government Minister Marco Biagi and President of COSLA Councillor David O’Neill. The Commission will meet for first time on February 23 and will report to the Scottish Government and COSLA in the autumn.

Marco Biagi said:

“The Scottish Government believes the current council tax system is unfair and we are acting on our manifesto commitment, and the recommendations of the Local Government and Regeneration Committee, to look at alternative approaches to local taxation.

“The Commission on Local Tax Reform will consider progressive, workable and fair systems, taking into account domestic and international evidence on tax powers and wealth distribution, the autonomy and accountability of local government and the impact on individuals who pay the tax.

“The members bring a broad range of expertise and experience and I look forward to starting this important work.”

David O’Neill said: “A great deal of work lies ahead, but this Commission is a chance to take a step back and think about the best way to pay for the local services that communities rely on every day.

“Across Scotland people are looking for the debate to break new ground, and that’s why I am determined that this Commission will be listening to people and organisations from all parts of the country, and setting out what it would take to give our local communities a real say about what matters most to them, and the best way to pay for it.”

The Commission’s Remit is:

“To identify and examine alternative systems of local taxation that would deliver a fairer system of local taxation to support the funding of services delivered by local government. In doing so, the Commission will consider:

  • The impacts on individuals, households and inequalities in income and wealth;
  • The wider macro-economic, demographic and fiscal impacts, including housing market and land use;
  • The administrative and collection arrangements that apply, including the costs of transition and subsequent operation;
  • Potential timetables for transition, with due regard to the 2017 Local Government elections.
  • The impacts on supporting local democracy, including on the financial accountability and autonomy of Local Government;
  • The revenue raising capacity of the alternatives at both local authority and national levels.

In conducting its work, the Commission will engage with communities across Scotland to assess public perceptions of the emerging findings and to reflect this evidence in its final analysis and recommendations.

The Commission will be supported by an independent secretariat comprising staff seconded from COSLA and the Scottish Government.

The membership is as follows (the Scottish Conservative Party has declined to take part).

  • Councillor Susan Aitken, SNP Local Government Convenor and Leader of SNP Group, Glasgow City Council;
  • Councillor Catriona Bhatia, Leader of Liberal Democrat Group and Deputy Leader, Scottish Borders Council;
  • Marco Biagi MSP, Minister for Local Government and Community Empowerment (Co-Chair);
  • Councillor Angus Campbell, Leader of Comhairle nan Eilean Siar and Leader of the Independent Group at COSLA;
  • Councillor Rhondda Geekie, Leader Of East Dunbartonshire Council and Leader of Labour Group at COSLA;
  • Dr Angela O’Hagan, Research Fellow in the Institute for Society and Social Justice Research and Convenor of the Scottish Women’s Budget Group;
  • Isobel d’Inverno, Convenor of the Tax Committee of the Law Society of Scotland and Director of Corporate Tax at Brodies LLP;
  • Mary Kinnonmonth, Manager of Dundee Citizens Advice Bureau and Member of Citizens Advice Scotland Board of Directors;
  • Dr Jim McCormick, Scotland Advisor, Joseph Rowntree Foundation;
  • Councillor David O’Neill, President of COSLA (Co-Chair);
  • Don Peebles, Head of CIPFA Scotland;
  • Alex Rowley, MSP for Cowdenbeath and Shadow Minister for Local Government and Community Empowerment;
  • Andy Wightman, Writer and Researcher, representing the Scottish Green Party.

 

I will be using this blog to explore in an open manner some of the issues to be resolved in devising an enduring and robust system of local taxation. The focus is very much on what to replace the Council Tax with but of course that replacement could involve not just a better system of domestic property taxation but the repatriation of non-domestic rating, sales taxes, local income taxes and other sources of local finance.

I am very clear that we need a new system of local government finance. Any new property tax should be designed in such a way as to endure over the long-term. It should be more reflective of land and/or property values, more transparent and be capable of contributing a greater proportion of autonomous local finance than is currently the case. Local finance and taxation is a vital part of rebuilding and strengthening local democracy.

Finally, this job is unpaid. On the face of it, this means that I will have to inevitably devote less time some of my other unpaid work on, for example, land reform. However, I plan to launch a crowd-funding appeal soon that will allow me to continue (and indeed increase) the time I can devote to that topic in what is a vital year ahead.

Later this afternoon I will publish a link to the Commission’s website. Meanwhile I welcome all views on the challenge that lies ahead.

The following Media Release was issued by the Scottish Land Revenue Group today

The £60bn Route to Scotland’s Economic Independence

Devolution of new financial powers to Holyrood could lay the foundations for an independent Scottish economy within the UK, according to a new Glasgow-based think-tank.

The Scottish Land Revenue Group (SLRG) estimates that Scotland’s government could expand the economy by £59.8bn over the 5 years up to the Holyrood election in 2021 if, as expected, it is given control of the Income Tax.

The forecast assumes that the government would use its powers to rebalance the tax system. The process would begin by zero-rating the Income Tax, scrapping the existing property taxes and replacing the revenue with a new charge on location rents.

The Income Tax now yields £11.5 bn. Studies commissioned by the SLRG show that replacing Income Tax with one charge on land rents would boost employment by 55,000 jobs.

According to Dr Roger Sandilands, emeritus professor of economics at Strathclyde University: “This is not a revenue-neutral policy. By switching the way revenue is raised, the losses caused by the Income Tax are turned into financial gains.

“This is an anti-austerity strategy,” Dr Sandilands stresses. “The tax shift means that government does not have to cut public services. Tax cuts would be self-funding. Under current policies, when taxes are cut, the money does not stay in people’s pockets. Ultimately, it flows into the land market. People have to pay more to buy or rent homes or commercial properties. By collecting that revenue in the form of location rents, government can maintain current spending on services like the NHS.

“So why switch the way revenue is raised? There are two benefits. First, without reducing people’s take-home pay, it becomes cheaper to hire people. Scotland would become a magnet for investors wanting to create enterprises within the UK. This reverses the drift to London and the South-east.

“Secondly, the so-called ‘deadweight losses’ caused by bad taxes would be reduced. There is a net gain to the economy. We estimate that, if Holyrood exercised its power to zero-rate the income tax, the Scottish economy would expand faster than the UK average. GDP would increase in a virtuous cycle of growth. The boom/bust property cycle would be damped down in Scotland, and our economy would leave the rest of the UK behind.”

These themes will be explored at an SLRG conference at The National Piping Centre in Glasgow on February 25. Speakers will discuss how communities can be rebuilt, trust restored in the institutions of governance, and investment in the economy can be increased without incurring government debt.

Conference Programme

Contact SLRG to book a place

Rewards from Eliminating Deadweight Taxes: The hidden potential of Scotland’s land and natural resource rents
by Professor Roger Sandilands.