Council Tax is Scotland’s #1 debt issue: axe it now!

SERVICE TAX: the SSP's Scottish Service Tax proposals would see the Council Tax axed and replaced with a fair tax, based on ability to pay.(Photo: Simon Whittle)

by Voice Reporter

· As Scotland’s councils met to set their budget for the new financial year Citizens Advice Scotland (CAS) revealed that amidst the tax hikes, cuts and job losses Council Tax arrears is now the number one debt issue they have to deal with.

CAS revealed the average debt of the 2,250 people it helped last year was £3,102. Unpaid Council Tax, it said, was the “number one debt issue” its advisors dealt with.

The charity is urging people to check if they are entitled to exemptions, reductions and discounts. CAS said the number of people claiming Council Tax Reduction has fallen by more than 80,000 since reforms in 2013.

Of course campaigns to ensure those facing such debt access all the benefits they are entitled to are welcome but the truth is that the Council Tax which was a cobbled together replacement for the hated poll tax is unjust and needs to go.

Indeed the current party of government the SNP agreed with that in 2007 when it first took power at Holyrood and pledged to axe it. It failed to do so.

The Council Tax disproportionately squeezes those on middle and lower incomes, in order to maintain proportionately lower rates on the very wealthiest. In 2016 it was has calculated that while the Council Tax claims 5.2 per cent of total income for the lowest earning 20 per cent, the richest 20 per cent pay just 1.7 per cent of their income.

Tory tax subsidises the rich
Since then the income share of the top 20 per cent versus the rest of us has only risen. Their share of Council Tax remains frozen.

When John Major’s government designed the Council Tax, they engineered it so that working and lower middle Scotland would essentially subsidise the tax share of the richest. All the rest of us pay more so they can pay less.

Meanwhile, cuts to service push a higher financial burden on to the same lower and middle income households. The highest earners who are already paying less are typically less impacted.

Generally with those sorts of top incomes, they can afford to do privately all the things that many need public provision to be able to do.

It took a mass public campaign last year to halt plans at Midlothian Council to scrap Musical Tuition in schools.

Friedrich Nietzsche once said that “without music, life would be a mistake”. In Midlothian, life without music was very nearly simply a method for making us subsidize lower taxes for the rich.

Councillors are not meant to be elected simply to manage cuts. They’re meant to be standing up for our communities—not pushing them down.

Yet in council chambers the length and breadth of the nation, councils seem to have fallen into some kind of a trance.

Blankly hammering at key jobs and services they shrug that there’s nothing they can do. After all, they and their party bosses just run the country. It’s not like that comes with a responsibility to the people who constitute it.

Their party leaders in Westminster and Holyrood have passed the buck down, handing their Councillors mountains of cuts and leaving them with no further instructions besides soaking up the blame.

Scottish Service Tax
That’s why it’s so important to show that there is a real, workable alternative to a the unfair Council Tax.

By linking tax bills with ability to pay, we can raise the necessary funds to invest in our schools and services without starving our economy or punishing the majority.

It’s time for a fair deal for working and lower middle Scotland. Fair local taxes can be at the heart of a Scottish civic renaissance.

There’s already ways it can be done. Whilst we need more powers to truly unlock they country’s full potential, Holyrood already has the power to fix this problem.

Despite the ongoing Punch-and-Judy routine, attacking each other for cuts they themselves are complicit in, successive governments have yet to actually meaningfully fix the situation. Even despite repeated election promises to look at the problem.

That is part of what makes it so important for us to clearly hold up the alternative. To simply decry the issue confuses and compounds the whole thing. Instead we can make a clear, constructive and positive contribution to the national dialogue. That is exactly what we find in the Scottish Service Tax.

The SSP’s Scottish Service Tax is the answer to the claims that nothing can be done to avoid these cuts. The proposition is simple, the case undeniable.

It’s a progressive tax to pay for (ideally universal) local services. Holyrood has full legislative power over Scottish local government. That includes the Council Tax.

Common sense argues that Holyrood should scrap the Council Tax and replace it with a local income tax, based on six bandings:
The first £0-£10,000 would go tax free
Income between £10,000 and £30,000 would be taxed at 4.5 per cent
Income between £30,000 and £40,000 would be taxed at 15 per cent
Income between £40,000 and £50,000 would be taxed at 18 per cent
Income between £50,000 and £90,000 would be taxed at 21 per cent
And income above £90,000 would be taxed at 23 per cent
For an example, on an income of £14,000 a year, the first £10,000 is under Band 1, so you would pay no tax on that. The following £4000 would be taxed at 4.5 per cent, under band 2, giving you a total bill of £180 each year under this example.

A progressive and fair tax
Tax bills are thus matched to ability to pay. Under these proposals we would find that the vast majority are either substantially better off, or at least no worse off in terms of tax burden—significantly improving the intended effect of the old Council Tax freeze of last decade.

Moreover the total revenue raised nationally would be sufficient to halt job and service losses and start actively re-investing in municipal culture and local services again. A fairer deal for working and lower middle Scotland!

Things change. All the time, things change. So whilst it’s endlessly remarked that the only two certainties in life are death and taxes, with the Scottish Service Tax we can make those taxes both fair and progressive, and life a little better and brighter for all while we can still enjoy it.

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