The Scottish political news today seems to be dominated by calls to “thaw” the freeze on Council Tax in order to relieve the significant financial pressure on local councils.
The political ramifications of all of this are, of course, considerable and it is not surprising that it is Labour-held Glasgow Council that is leading the calls to end the freeze. Breaking the concordat has been a top priority for Labour even since the ink was drying on the agreement. Delivering a Council Tax freeze that is appreciated by the entire country and would be campaigning gold for the SNP in the run up to May 2011 was always too much to take for Labour. They tried to break it via questioning school meals funding, they tried to break it through questioning the lack of ring-fencing and now they’re regrouping to try to break it through there just not being enough cash in the various pots.
There are, of course, good reasons for increasing Council Tax, so much so that I think it is now necessary to do so, but the practical logic may well get lost amidst the political positioning from all sides.
Even though a deal’s a deal and the 32 councils that signed up to this concordat have a duty to make it work, the recession was an unexpected body blow so flexibility is crucial to ensure some councils don’t simply collapse. That flexibility includes innovative cost-cutting ideas to deliver existing budgets but it should also extend to squeezing a little bit of extra income from the local area to ease the pressure, where all sides agree.
I don’t have the data but a simple calculation comparing the expected increase in Council Tax had there been no freeze with the extra £70m councils received from the Scottish Government as part of the concordat should show what increase may be required in the coming year. That is, (and to put it very crudely), council tax rises in the past few years may have raised £250m (say) and councils have only received £210m from the concordat so an extra £40m will be required next year, over and above any annual increase that may be necessary.
Ideally it should be left to individual areas to decide. Some areas may wish to pay a little bit more to be confident their bins will be collected, recycling continues and all other local services are as efficient as possible. Alternatively, some areas may prefer cash to be in their own pockets and will put up with any problems that a cash-poor council may come up against. It is, of course, difficult and indeed nigh on impossible to gauge what each local area wants to happen next.
Further to that, John Swinney may crunch the numbers and decide that councils have enough money to make it through the bottleneck, which of course would result in the SNP making it through to May 2011 with the concordat still intact.
The upshot of all of this is, much like the last contest, is that this coming Holyrood election battle will be fought on local taxation which in itself means we’re all four years older and no further forward.
Given that, I’m not so sure how persuasive a call for a Local Income Tax will sound the second time around when it wasn’t pushed particularly hard when the SNP had its opportunity in the past four years. The good news is, Labour don’t seem to have advanced their position any further either.
Maybe we should give the Greens’ Land Value Tax idea a run for its money?
SNP Tax
2 minutes ago
6 comments:
Jeff,
The SNP did not 'have their chance' to bring in LIT, as you will remember it was stymied by the opposition, who, as you rightly say, were only interested in shafting the government.
TartanSeer,
Sure they did have a chance to bring in LIT. Until it's put to a final vote who knows what could happen. Lib Dems were just about onboard and I didn't get the impression the Greens had been fully debated on the matter. Until there's a vote on it, you can't know what the final result will have been and I think that might hurt the SNP in the next election this time around.
It will be interesting to see if Labour dominated COSLA pushes for Council Tax increases of around about 20%, after all that is the difference between band C council tax ratesin England & Scotland (source: Beverage Report). If they do, they will alienate many possible suporters who will not afford such a high increase.
Isn't it ironic that it's Glasgow City Council that's leading the calls when they'd already had an independent freeze two years before the 2007 concordat?
I have a lot of time for COSLA but you're right Allan that their view of the situation will be interesting.
I still think Council Tax has to go up at some point soon though.
Ironic Andrew but also understandable. Five years of unbroken frozen income with costs increasing, no wonder they are chomping at the bit for more money.
As I say though, everything else to one side, a deal's a deal.
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