Commission on Local Tax Reform Published"
December 2015


The Commission set up by the Scottish Government to consider a “fairer system of local taxation has published its report entitled, “Just Change: A New Approach to Local Taxation,” Local Tax Commission Final Report.

It listed a number of recommendations, including

  • a system allowing local rate-setting "wherever possible"
  • minimising the need for complex relief schemes for individuals or households
  • a transitional framework enabling taxpayers to adjust to the new system and new tax liabilities
  • broadening the local tax base to include environmental, resource, sales or tourist taxes, appropriate to local circumstances
  • and local authorities with lower tax bases should not lose out as a result of a changed system

They outlined three options for a replacement to Council Tax

  • a replacement property tax, which would be based on the value of land and buildings
  • a land value tax, based on the value of land only
  • and a local income tax which would raise revenue based on a householder's taxable income

The Commission made no specific recommendations as to the tax that should be introduced on the basis that is a matter for politicians. We should see some indication of the various parties positions when they set out their proposals for the May 2016 elections. The commission did indicate there were practical issues in introducing land tax or a local income tax. It is difficult to see these being introduced in the short term based on the Commission’s own understanding of the obstacles to be overcome.

While the headlines in the news suggested that Council Tax must end, the suggested alternative property tax appears to share the same principles as Council Tax with a charge based on the value of a property. The recommendations are for a wider variation in the charges from the lowest band to the highest band and a change to the Council Reduction Scheme to widen the availability to other income groups. Short term this appears to be the most likely outcome of the Report although there was clearly support for an element of taxation on income to be included to make any local tax based more on ability to pay. Clear practical difficulties were noted and this may be something for further ahead. It appears the earliest any changes could be introduced will be 2017 so much may happen yet.

We will continue to monitor progress in this area and provide further updates