Council tax paid by those in the four highest bands would rise by as much as £517 a year under a plan by the Scottish Government that would generate £100 million a year that “will be invested in schools through future local government settlements.”
The 75% of Scottish households that live in bands A to D would not be affected, but “to make the system fairer from April 2017” the rates paid by those in the four highest council tax bands of E, F, G and H would be raised.
The Scottish Government said that under the proposals, the average increase in council tax would be £517 a year for band H, £335 for band G, £207 for band F, and £105 for band E.
It said 54,000 households living in bands E to H on low incomes — more than one third of which are pensioner households — “will be entitled to an exemption from the changes through the council tax reduction scheme.”
The new system “will also provide additional support to families on low incomes across all council tax bands by extending the relief available to households with children,” said the Scottish Government.
“This will benefit 77,000 low income families by an average of £173 per year, supporting an estimated 140,000 children,” said the government.
Council tax bills have been frozen in Scotland since 2007 and this freeze will continue until April 2017.
“From April 2017, the freeze will be replaced with discretion for local authorities to increase council tax by a maximum of 3% per year,” said the Scottish Government, adding that this could generate up to £70 million for council services across Scotland.
“Over the past eight years, our council tax freeze has helped households across the country, keeping bills affordable during difficult economic times while ensuring that councils receive the funding required to provide the services people need,” said First Minister Nicola Sturgeon.
“The council tax freeze will remain in place for 2016/17 – a ninth consecutive year.
“However, the Commission on Local Tax Reform made clear that the present system could be made fairer.
“We are choosing to do this in a reasonable and balanced way that will also generate £100 million of additional revenue to invest in schools.
“These reforms to council tax bands will mean no change for three out of every four Scottish households, with those in lower banded properties paying no more than they do now.
“Households will also still, on average, pay less than those on equivalent bands in England and less than they would be paying had the council tax freeze not been in place.”
The First Minister added: “In responding to the Commission, we have also heard demands for local authorities to be more responsible for their own finances and be less dependent on grants from central government, but without adding to the burden on households.
“As part of our proposals, from April 2017, we will replace the council tax freeze with discretion for councils to increase tax — if they so choose — by a maximum of 3% a year.
“This will see councils be more accountable for raising revenue, while ensuring that the rapid and significant rises we saw in the past do not return.
“Importantly, to ensure the contribution individuals make to the delivery of local services is more closely tied to their earnings, as well as to incentivise councils to support economic growth, we will formally consult local government on the assignment of a portion of the devolved income tax raised in Scotland to councils, reducing their reliance on grant funding from central government.”