Below is an update from Council Officers on the impact of the SNP/Green Gov’s ill-thought Council Tax proposals on Edinburgh residents. The dithering SNP Government just needs to deliver its commitment to scrap the Council Tax. The current SNP/Green proposal to increase bills by 0-22.5% will not change the fact that it is a fundamentally unfair tax, or reduce the costs faced by the poorest Scots. On top of that, the SNP/Green Gov will claw back a big chunk of the cash raised.

Briefing
The Scottish Government and COSLA have launched a consultation on the Council Tax system.  The consultation was published on 12 July 2023 and focuses on potential increased Council Tax charges for properties in valuation Bands E to H.

The consultation runs until 20 September 2023 and seeks views on:

1. Increasing Council Tax for properties in valuation Bands E to H
2. The phasing of any increases
3. The potential to expand Council Tax reduction.
4. Impact of the proposed changes.

The Scottish Government oversees a Joint Working Group on Sources of Local Government Finance.  This is essentially a political forum with Local Government represented by the COSLA presidential team and two officers drawn from the Institute of Revenues, Rating and Valuation and COSLA Directors of Finance. The Joint Working Group has been exploring proposals for meaningful Council Tax changes

Scottish Government advises proposals contained within the current Council Tax consultation is just one aspect of a broader range of potential measures that are under consideration.  The current consultation asks for views about the relationship between the property valuation band and the Council tax rate set.

To assist political groups develop their own consultation submissions the following information has been compiled.

1. Occupiers of domestic properties pay Council Tax, with the amount due to be paid depending on the valuation band of the property.
2. Council Tax is often described as a regressive tax. This is because when the average Council Tax liability is expressed as a percentage of the estimated property value, the effective tax rate is higher for lower value properties and lower for the higher value properties. 
3. The Scottish Government increased the Council Tax Band E to H multipliers in 2017, with a percentage change of 7.5% for Band E, 12.5% for Band F, 17.5% for Band G and 22.5% for Band H.  
4. The Council Tax Reduction scheme protects the most financially vulnerable. Entitlement and the amount awarded is based on the characteristics, capital, needs and income of the household.
5. The proposed changes in the current consultation are identical to those in 2017, with a percentage change of 7.5% for Band E, 12.5% for Band F, 17.5% for Band G and 22.5% for Band H.  
6. Approximately 38% of Edinburgh households would be impacted by the proposal.
7. The consultation seeks views on whether the changes could be introduced on a phased basis from 2024-25 onwards, with a percentage year-on-year increase over several financial years.  This can be delivered from an operational perspective but there are likely to be resource, system and scheduling considerations.
8. The consultation also requests views on the impact of the proposed changes. The proposal has the potential to have a range of impacts and it is anticipated that Scottish Government would complete a full impact assessment before implementing any change.  The proposal has the potential to raise funds that could tackle hardship and inequality.  The financial impact on protected characteristic groups will also need to be considered, including those that live in higher value properties but have more limited financial means.
9. The consultation proposals do not impact on the Council’s ability to set the Council Tax rate for Edinburgh.  The Council would determine this, with any updated multipliers being applied in the normal way as part of the overall process.
10. The impact of the proposal is detailed in the following table, with figures based on the 2023/24 charge.  This is for illustrative purposes only.

It is anticipated that a similar arrangement to reflect any agreed revisions to Council Tax multipliers will be adopted within the Local Government Finance Settlement, as was the case for the previous related changes in 2017.

In line with the underlying principles of Council Tax, any additional income raised from revising the multipliers would be retained by the council concerned.  However, in accordance with the needs basis approach underpinning the Local Government Finance Settlement, an individual council’s funding from Scottish Government will be adjusted to ensure that their overall percentage share of grant funding and Council Tax remains unchanged.  This ensures that authorities with fewer higher-banded properties (and thus raising proportionately less income from the changes) are not disadvantaged. 

Based on the £176m of additional income anticipated to be generated across Scotland, the net increase in resources available to any given council would be aligned to its share of the Scotland-wide needs assessment.  For Edinburgh this would equate to £14.1m (i.e. £176m * 8%). 

Overall anticipated position for Edinburgh

• Estimated additional Council Tax collected and retained locally = £25.5m
• Less reduction in Scottish Government funding = £11.4m (which will be distributed to councils with a lower number of band E – H properties to ensure adherence to overall funding being based on a needs-based approach).
• Net increase in total funding = £14.1m

COSLA has produced a separate briefing note and this can be accessed here.  

Officers will update Committee on the outcome of the consultation. At this time there is no definitive timeline as to when the consultation outcomes will be published.

The consultation notes that changing the Council Tax multipliers requires regulations to be agreed in the Scottish Parliament, as well as changes to local authority billing and administration systems. These could be delivered in time for changes to take effect from the start of the 2024-25 Council Tax year.