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politics, scotland

Council tax: the tax that dare not speak its name.

IT’S the tax that dare not speak its name. Scotland’s parties vie with each other to profess their commitment to social equity, the common weal, care of the elderly. But this stops just short of lifting the council tax freeze which has been in place now for eight long years. But now the Chancellor has increased it by 2% in England to finance social care

George Osborne’s spending review was  preceded by a chorus of local councils forecasting catastrophic service cuts. They’re already cut beyond the bone. Where will it end? Glasgow claims to have lost 4,000 jobs in five years and claims another 3,000 are to go. Can John Swinney hold out much longer?

But if there is one thing Labour, Tory and the SNP politicians agree upon it is that increasing council tax is not the way to deal with the crisis of social care. Just don’t go there.

Labour politicians grumble about how “regressive” the council tax freeze is – middle class homeowners tend to pay more of it because families on low incomes have been exempt – but Labour never seems to get round to actually lifting it.

Kezia Dugdale has been calling on the Scottish Government to raise taxes by using powers it doesn’t actually have. But during her leadership campaign she firmly rejected raising the cap on taxes it does have: council tax.
As for councils themselves, it’s never very clear how serious they are about taking on more responsibility for their own funding. Council tax only raises 15 per cent of what they spend. If they tried to use council tax increases instead of the inflation-linked subsidy they get from the Government they would be faced with a firestorm at election time.

Councils complain that that they’ve lost £2.5 billion in four years, but that’s largely because they no longer have to pay for police and fire services which have been taken over by central government. According to the number crunchers at the Scottish Parliament Information Centre, the £70m the councils get annually to compensate for the freeze has largely covered their true losses.

No one likes council tax, but nor can anyone get rid of it. The SNP tried to introduce local income tax in 2008, but it was rejected by the Scottish Parliament. The Nationalists didn’t seem terribly disappointed. They know that voters don’t like paying taxes at the best of times, but they really hate paying new taxes.

The Scottish Local Government Commission, set up by the Convention of Scottish Local Authorities and the Scottish Government to look for a “fairer” alternative is about to propose a hybrid system: a cross between council tax and local income tax. Well, good luck with that.

There will always be losers. And successive governments have been so afraid of the losers that council tax valuations haven’t been raised since 1991, despite three decades of house price inflation. A property tax that doesn’t take account of changes in property values isn’t worthy of the name.

I suspect the underlying problem is public mistrust. All that voters ever hear from local authorities are forecasts of job losses. Local government in Scotland has an unfair image as a public sector job creation programme whose first responsibility is financing the salaries and pensions of its current and former employees.

This dates back to claims in 2012 that one-quarter of council tax payments was going to pay former employees’ pensions entitlement. That sounded a lot, but since council tax raises only a tiny proportion of local funding it wasn’t a meaningful figure, and it no longer applies because much of these pension obligations have been taken over by the central state.

The truth is, local government hardly warrants the name any longer. We don’t have local government, only directly-financned outposts of central government along with a proliferation of Aleos (arm’s length external organisations). That council leisure centre you never use is probably now a private company, or a trust or a charity.

Councils favour Aleos because they have less responsibility for pay and conditions within them. Which means some councils are resembling holding companies with a permanent management that does less and less.

Cash-strapped councils always seem to find just enough to pay top executives in six figures, and give eye-watering salary and redundancy packages, like the £436,000 paid in 2014 to David Crawford, Glasgow’s former director of social care services.

No, you don’t have to look too hard to understand why voters don’t like paying council tax increases. They feel they pay enough in taxes already.

From Herald 23/11/15

About @iainmacwhirter

I'm a columnist for the Herald. Author of "Road to Referendum" and "Disunited Kingdom". Was a BBC TV and radio presenter for 25 years - "Westminster Live" and "Holyrood Live" mainly. Spent time as columnist for The Observer, Guardian, New Statesman. Former Rector of Edinburgh University. Live in Edinburgh and spend a lot of time in the French Pyrenees. Will that do?


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