RESIDENTS in high-value properties across the Capital face being hit with a “mansion tax” under plans aimed at helping cash-strapped city leaders balance the books.
Senior figures in Edinburgh’s joint SNP-Labour administration have unveiled proposals which could see council tax bands “decoupled” so larger levies can be introduced for more expensive homes.
Council tax is currently set at eight different levels, depending on the value of a property, with charges in each band tightly related to each other.
Local authorities only set the Band D level, meaning rates in each of the others are fixed as a proportion of this.
The Scottish Government’s flagship policy of a council tax freeze means rates haven’t increased since 2007, and they remain fixed for 2016-17.
But city bosses said they were “optimistic” of securing the power from ministers to make the system more “flexible and progressive” from next year, allowing tax rises to be focused on those whose properties are more expensive.
We’re all social democrats. We’d all happily say that a progressive tax, based on the ability to pay, should be the basic idea behind it.Sandy Howat
Local SNP and Labour leaders both described the existing system of local government finance as “broken” and called on ministers to implement urgent reforms.
Proposals for greater flexibility came as council leaders unveiled their updated 2016-17 budget motion, aimed at saving around £85 million, which contained a number of U-turns on previous draft plans.
• Dropping moves to reduce the size of the council’s in-house home care service;
• Reinstating the team which deals with antisocial noise calls at night;
• Axing proposals to reduce the number of lollipop men and women;
• Scrapping plans to shrink the number of community centre staff.
Councillor Sandy Howat, SNP leader and member for the Meadows and Morningside, said he and his colleagues expected to receive powers which would allow them to make the current tax system more flexible.
He said: “It will take too long to look at how we redo the whole package of local government taxation.
“What we need is an interim step where we can do something with the present tax system to give it more flexibility – that is, decouple the bands, or something as simple as that, which might give us an opportunity not just to have a uniform blanket rise but to tweak it somewhat.
“That could be enacted quite quickly. I am optimistic that we will have a quicker reform rather than a slow revolution.”
He added: “We’re all social democrats. We’d all happily say that a progressive tax, based on the ability to pay, should be the basic idea behind it.”
Asked if this would mean greater taxes for higher-band homes, he said: “Yes – there are lots of high-end properties in my ward as well and I’m quite happy to say that. Council tax, which is not a fair tax, is one part of the taxation issue but the other part of it is democracy and representation.
“There’s an old adage from North America that there’s no taxation without representation. What we have here is representation with very limited taxation. I am pleased that the council tax will be coming to an end. I think everybody, collectively, wants that.”
Ministers are currently considering the results of a commission on the future of local taxation in Scotland.
A cross-party review, which reported last month, concluded the council tax “must end” and be replaced by a fairer system where the better-off pay more.
The commission stopped short of recommending an alternative, but outlined options including a reformed property tax, levies on income and land, or a combination of these.
Under current arrangements, people in the highest-value homes pay three times more than those in the lowest.
But the commission said that, under a “proportionate” property tax system, those in the most expensive homes would pay 15 times more, while people in the cheapest homes would see their bills halved.
No move to change the system is likely before the Holyrood elections in May, but the parties are expected to set out their own proposals in their manifestos.
City leader Andrew Burns said: “It frankly pains me that this year’s local government settlement is going to damage the services I and my colleagues on the city council are responsible for delivering.
“I am now certain, absolutely beyond doubt, that the system of local government finance in Scotland is broken. But I don’t want this issue to settle on council tax. It’s much bigger than that.
“We need to offer local councils options. If you have a cursory glance at our North American and European counterparts, they have control of 40 per cent of their tax base. And in a couple of months time, the parliament which is sitting half-a-mile down the road will also be controlling about 40 per cent of its income.
“And yet we in local government are still going to be sitting on around 18 per cent of our income, with 82 per cent coming in a block grant. It’s not sustainable.”
Around 700 of the 2000 redundancies being sought as part of a bid to balance the books over the next four years have been secured, city council leaders have revealed.
They also said their intention was to achieve the total planned reduction in job posts without having to resort to compulsory cuts.
However, unions said staff were being left in the dark about what was available to them. In a recent newsletter, leaders at Unison City of Edinburgh branch said: “As yet there appears to have been no additional attempt to find alternative posts for those already on the redeployment pool or a plan for those who are facing that prospect in the next few weeks.
“Staff are being asked to make life changing decisions on either accepting voluntary redundancy or risk going for a post without any knowledge of what options are available.”
Welcoming progress towards the 2000-post target, SNP councillor Sandy Howat, who is the city’s deputy leader, said: “[The redundancies which have been secured] are before we go into a much wider service review over the next few months.”