LOCAL TAX REFORM: A REALLY BALANCED PANEL?

Membership of the Commission on Local Tax Reform has just been revealed.

Its remit is to look at ‘fairer systems of local taxation’ and consider ‘alternative approaches to local taxation’.

You might have thought this august body would include representatives from local taxpayer groups, and certainly SME organisations such as the Chambers of Commerce and the FSB.

No such luck.

The Commission is heavily skewered towards producer interests – local government grandees, COSLA spokespeople and representatives of political parties ambiguous at best about maintaining the council tax freeze.

Remember that council tax is paid out of net after tax incomes -the ones that have been squeezed over the past five years and which have shown very little if any increase.

The Commission will be co-chaired by Local Government Minister Marco Biagi and COSLA President Councillor David O’Neill.

Its 11-strong membership comprises three COSLA officials (in addition to O’Neill), four nominees from  political parties other than the Conservatives; a member of the Joseph Rowntree Foundation, the convenor of the Scottish Women’s Budget Group, someone from the Citizens Advice Board of Directors and Andy Wightman (Green), the land reform activist and campaigner.

Ratepayer interests to the fore? Business concerns represented?

The remit of the Commission – it met for the first time yesterday (Monday) and is due to report in the autumn – is to “consider progressive, workable and fair systems, taking into account domestic and international evidence on tax powers and wealth distribution…  consider the impacts on individuals, households and inequalities in income and wealth; the wider macro-economic, demographic and fiscal impacts, including housing market and land use”,  and the revenue raising capacity of the alternatives at both local authority and national levels”.

Might the remit to investigate “the revenue raising capacity of alternatives” open the door to other taxes being levied by councils – for example, the oft-mooted hotel bed tax?

Business organisations through back channels have apparently been assured that non-domestic (business) rates will not be up for discussion – though the remit is ambiguously wide.

But will local business taxation really be off-limits for this radical rag, tag and bobtail of town hall big spenders?

Says Colin Borland, the Federation of Small Businesses’ (FSB) head of external affairs in Scotland, “Business rates raise over £2 billion a year for Scottish councils – roughly the same amount as council tax. The remit of this commission is unhelpfully ambiguous on whether or not they’re included in this review.

“While the FSB has pushed for serious reform of non-domestic rates, they can’t be treated as an afterthought in this forum. We’ll be writing to the Scottish Government to seek clarity on this matter.”

Business rates that have signally failed to reflect the recession and its long tail aftermath have contributed to the closure of many businesses in towns and villages across Scotland. High streets have been facing a huge problem.

Is this heavily skewered and loaded Commission up to the objective, independent-minded task it has been set?

Businesses, particularly in the retail sector will be watching closely.

As Scottish Retail Consortium Director David Lonsdale pointed out recently, “The recovery in consumer confidence remains fragile however, and brings into sharp focus big upcoming public policy decisions which could affect disposable incomes and take home pay, notably the First Minister’s proposed replacement of council tax and the setting of the Scottish rate of income tax. These decisions must support consumer spending and economic growth.”

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