FOR many years, there has been a pledge from successive SNP Scottish governments – until recently also assisted by the Scottish Greens – to completely reform, if not always quite abolish, the system of local taxation on domestic or residential property in Scotland called the Council Tax.

The defeat of the hated Tory poll tax – officially the Community Charge – in 1991 led to its replacement with the Council Tax in 1993. But it also led to the creation of another long-standing economic and social injustice.

The poll tax was a flat-rate tax upon individuals regardless of their income. Yet the Council Tax was not a progressive form of taxation, emphasised all the more by being based on property valuations – which are now very out of date, having been set in 1991 – and the unwillingness of successive Scottish governments to allow much in the way of variation in Council Tax rates so that, despite some additional central funding, cuts to local services were effectively imposed by Holyrood.

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As many readily acknowledge, the poorer in society rely far more on local services than the better off do, so any cuts then affect them far more.

In the late 1990s and early 2000s, the Scottish Socialist Party (SSP) came up with an alternative. Income or earnings-based, the party called it the Scottish Service Tax. Although other political parties, including the SNP and Scottish Liberal Democrats, said that they favoured reform with such a type of tax, none bar the SSP came up with specific proposals for this, and then tabled bills in the Scottish Parliament to take the issue forward. SSP MSP Tommy Sheridan did this in both the first and second Scottish parliaments.

The basic starting point was that the Council Tax was unfair and regressive whereas the Scottish Service Tax proposed what was a progressive and fair form of local taxation.

The Scottish Service Tax was to be based upon income scaled to the ability to pay, which would also then raise millions of additional pounds for funding of local services – and the jobs that came with it – while lifting the heaviest burden off working-class households.

The tightening of Scottish Government finances as a result of Westminster’s actions means that the Scottish Government’s policy of freezing the Council Tax by providing local authorities with the funds to do that has become less and less sustainable. This means that substantial hikes in Council Tax are becoming more and more likely.

As a result, the opportunity to reform Council Tax once and for all – by its abolition – is becoming a more practical possibility. This means it’s an opportune time once again to look at the idea of the Scottish Service Tax.

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In 2022, the SSP, using revised rates, proposed that those with an income below £10,000 pay nothing at all. Those with an income of between £10,001-£30,000 would pay £4.5%; those with an income of between £30,001-£40,000 would pay 15%; those with an income of between £40,001-£50,000 would pay 18%; those with an income of between £50,001-£90,000 would pay 21%; and those with an income above £90,001 would pay 23%.

This would mean, for example, for those on a then average income of £25,000 a year, their first £10,000 would be under Band 1, in other words, tax-free. The following £15,000 would fall under Band 2, taxed at 4.5%, giving a total bill of £675 each year. This bill would only have been around one-third of what would have then been expected under Council Tax rates in most parts of Scotland.

Only at the much higher levels of income do the bills really begin to increase. Someone earning £100,000 a year would receive a bill for £1241 per month. Their first £10,000 of income would still be tax-free, the next £20,000 coming in at 4.5%, the next £10,000 at 15%, the next £10,000 at 18%, the next £40,000 at 21% and the last £10,000 at 23%.

For 2018-19, the Council Tax raised around £2.4 billion. The SSP, in their own words, “conservatively” calculated that the Scottish Service Tax would have raised £4.1bn, so that there would be an additional £1.7bn raised for schools, jobs, and local services while simultaneously lowering bills for the majority of people.

A tweak could be that the rates are not incremental but flat, meaning that those earning £90,000-plus would pay 23% on all this income. But that would mean needing an adjustment with the Scottish income tax system itself.

And, of course, those with enough riches to employ accountants and tax advisers would try to find ways of avoiding their fiscal responsibilities here, so other measures to tax other forms of wealth and income would be needed. But at least a Scottish Service Tax would be a good, solid start to resolving a very long-standing inequity in society in Scotland.

Professor Gregor Gall is a research associate at the University of Glasgow and editor of A New Scotland: Building An Equal, Fair And Sustainable Society (Pluto Press, 2022)