Progressive policy think tank IPPR Scotland said on Monday there is “significant headroom to raise council tax in Scotland.”
In a report, IPPR Scotland said: “Council tax doesn’t raise enough money (in Scotland).
“If Scotland’s council tax bills were on average the same level as Wales, we would have around £600m more to spend each year.
“If bills were the same on average as in England, we’d have around £900m more to spend each year.”
The think tank said the next Scottish government should commit to closing the gap between council tax revenues in Scotland and council tax revenues seen in the rest of the UK.
It said that throughout the next parliament, council tax bills should go up more quickly for higher value properties than for lower value homes.
And IPPR Scotland said the next Scottish government should work with local councils to create a “basket of local taxes to ensure the system is broad and as fair as possible.”
The think tank said that regardless of who wins the election in May, “it’s likely that taxes will have to go up next term by more than we have seen throughout the history of devolution …
“With the UK government currently planning a combination of spending cuts outside of health, and tax rises (including freezing the income thresholds in the rest of the UK) the next Scottish parliament is likely to need to be one that raises significantly more tax revenue than now, just to ensure spending cuts in Scotland are no worse than in the rest of the UK.
“To go beyond spending plans seen elsewhere, and deliver on Scotland’s bigger ambitions around child poverty, fair work or wellbeing we will need to see tax revenues rise by even more.”
IPPR Scotland said: “Council tax is incredibly overdue reform.
“It’s outdated, based on values from 30 years ago.
“It’s regressive by value, in that the highest value properties have the lowest bills as a percentage.
“And it’s regressive by income, with lower income families paying more council tax as a proportion of their income than the richest …
“Given the sacrifices of the last year, surely it seems fair to ask for more from those with the broadest shoulders to help pay for recovery.
“We have five proposals for the next Scottish government that would do just that.
“First, the next Scottish government should commit to closing the gap between council tax revenues in Scotland and council tax revenues seen in the rest of the UK.
“This could raise hundreds of millions of pounds a year to rebuild Scotland following Covid-19.
“Second, throughout the next parliament council tax bills should go up more quickly for higher value properties than for lower value ones.
“Our proposal, which would see higher increases for higher value properties in each year of the next parliament, could raise an additional £380m per by 2025/26.
“Third, we should extend support for low-income families, so that no family in poverty is asked to pay council tax.
“If we’re serious about tackling poverty then it makes no sense to give with one hand and take with the other.
“Fourth, and crucially, we must see radical reform of local tax in Scotland, with primary legislation introduced in the first year of the parliament.
“Implementation would take a number of years which is why we must move quickly, and also why we must improve council tax in the meantime.
“Our proposal is to implement a percentage of value tax, that would see annual property tax bills set at 0.75 per cent of home value, with local variation.
“This could either be implemented gradually for new purchases only, and alongside the ongoing council tax system, or it could be implemented for everyone in one go to replace council tax altogether.
“And fifth, we need to move beyond property taxes.
“The Scottish parliament’s powers over local tax are very extensive.
“The next Scottish government should work with local councils to create a basket of local taxes to ensure the system is broad and as fair as possible.
“In our view this should include testing of local carbon, land and inheritance taxes.
“Securing a recovery from Covid will not be easy.
“It will be harder-still to deliver a recovery that does justice to the sacrifices of the last year.
“But if we are bold and ambitious, and make the hard choices needed to match our high-level of ambitions with action, we can secure the recovery we need to build a Scotland better than before.”