AN SNP council leader and his deputy have insisted the way local government is funded in Scotland needs to be reviewed.
In the run-up to the elections, Renfrewshire Council leader Iain Nicolson and his deputy Jim Paterson told The National the Scottish Government needs to give council tax some “serious thought”, with the former admitting it is “becoming insignificant” as part of the budget process.
Paterson said he’d like to see councils get more cash and be given “higher priority” when it comes to funding, while Nicolson said local authorities need multi-year settlements as opposed to the 12-month deals they’ve received in recent years.
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Both councillors are running for re-election next week.
The Scottish Government has claimed it treats councils fairly and has provided a real terms increase of 6.3% to council budgets for the coming year despite cuts to its own budget, which it blames on the UK Government.
Speaking exclusively to The National, Nicolson was critical of the Scottish Government “stepping in” and telling councils to freeze tax levels last year despite ministers compensating those who did so.
He said: “My view is it’s a bad place councils are in just now.
“We only collect in about 19% of our budget from council tax and then when you have national government stepping in and saying we’re freezing council tax, it defeats the point of having local responsibilities and local accountability when the government can switch it on and off like that.
“I think politicians of all colours have been quietly afraid to go into that territory when you start talking about taxation. I think it’s [the council tax] quite regressive. It’s slowly becoming an insignificant part of the whole budget process every year.
“At the very least local government really wants to get back to three-year settlements so we can plan our finances and we can spread the load. Local government really needs to have settled budgets, so we can plan and borrow and know that resource is going to be there.
“The whole system I think needs to be reviewed. If you want to keep local accountability you need to decide whether you increase the funding that comes from local taxation and then the communities would have far greater interest in who is running our councils.”
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Local authorities were offered £90 million last year if they agreed to freeze tax rates, but many councillors viewed the move as a power grab by Holyrood.
Council tax rates have either been frozen completely or capped at 3% since the SNP came to power in 2007.
Most councils introduced a hike of around 3% this year but those in bands A to D will not feel the hit just yet as a £150 rebate was introduced as a way of helping with the rising cost of energy.
Local government umbrella body Cosla has been highly critical of funding decisions in recent years, stating last year that Kate Forbes “does not give local government what it needs to survive”.
Council tax is described as regressive because it is not linked to income as opposed to income tax or National Insurance contributions.
With progressive tax – like land value tax (LVT) - on the other hand, the rate increases as the taxable amount increases, with the aim of reducing the effect on those who earn less.
The LVT is a levy paid on the value of land upon which a property sits, rather than a tax on the property itself, and many have suggested this could be a fairer method of taxation the Scottish Government could introduce.
Paterson said he would like to see councils get an increased settlement and thinks a more progressive tax should be brought in.
He added: “I don’t think local government gets enough funding.
“I would like to see local government receive an increased settlement.
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“We know when we get funding the difference we can make. I would like to see local government become a higher priority when it comes to funding and I think a serious look at the council tax needs to happen at a national level as well because there’s a lot of misapprehensions about it and how much funding it provides.
“I do think we need to have a look at introducing a more progressive tax but that’s for people higher up than me to come up with, unfortunately.”
A Scottish Government spokesperson said: “We are treating councils fairly and providing a real terms increase of 6.3% to local authority budgets for the coming year.
“This comes against a cut to the Scottish Government’s overall budget of 5.2% in real terms, due primarily to UK Government funding reductions.
“Funding for local government in future years will be determined as part of the Scottish Government’s current Resource Spending Review.
“As set out in the Programme for Government, we are committed to establishing a working group with representation from the Scottish Green Party, and engaging with COSLA, to oversee the development of effective deliberative engagement on sources of local government funding, including council tax.
“This work will culminate in a citizens’ assembly. We will set timescales for completion of this work within the current parliamentary session.”
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