NEWS RELEASE : Leading professional body calls for overhaul Scotland’s Local Tax System to Deliver Stability and Fairness

17 March 2011: EMBARGOED UNTIL 00:01 HOURS FRIDAY 18th MARCH

An Inquiry led by the body that represents local taxation professionals has recommended that a new taxation system, based on the market value of homes, is the best option for delivering a stable and fair local tax in Scotland.  It suggests that a ‘Local Residence Tax’ should replace the council tax system, from an earliest implementation date of 2016. 

The new tax, based on discrete capital values, would incorporate regular revaluations using proven computer-aided mass appraisal techniques.  Taxpayers would be given clear supporting evidence of identifiable comparator properties, to make the valuation process transparent.  The system could also provide for local authority discretion to set its own rate of taxation for different ranges of value; and for a cap to be applied on capital values.

Jim McCafferty, President of the IRRV’s Scottish Association, commented on the issue of the Report findings:

"The present difficult economic conditions do not mean we should shy away from the bold and innovative thinking that is required to deliver a local taxation blueprint that fits Scotland’s needs in the 21^st century.   It is vitally important that members of the new Scottish Parliament, to be elected this May, recognise the need for fundamental reform and improvement to Scotland’s local taxation system. Council Tax was effectively a quick fix to get us out of the mire of Poll Tax.  What we need now is a system that is more responsive to the ability to pay and is relatively simple to understand and administer.  It needs to be cost efficient and able sustain a realistic level of contribution to the cost of local government services.  The Local Residence Tax would deliver on all these counts.         

"We support a progressive income-related rebate scheme, which provides for additional local determination of the incidence of relief and a revised targeted measurement of need. We welcome the UK Government’s view that a benefit scheme relating to local taxation should be administered locally, because that is where you find the very best customer-focused services. On a wider note, the UK Government needs to recognise the importance of administering both local taxation and housing costs support at the local level – placing them within the planned Universal Credit system will be a universal disaster, and will bring about significant hardship to claimants."

Other recommendations in the report include:

·         Allow for collection of water and sewerage charges in a way that reduces the burden on low income households; and adequately recompenses local authorities for their work in administering and collecting those charges.

·         Introduce statutory data sharing, to ensure the public purse is properly protected. 

·         Establish a centralised, secure benefit database of all people who claim any benefit to allow cross-matching / anti-fraud / take-up initiatives;

·         Retain the national Non-domestic rates (NDR) system, but consider the option to shorten the NDR revaluation cycle from the present five years, following the 2015 scheduled revaluation;

·         Consider reintroducing the rating of agricultural land and buildings as part of an overall review of policy on exemptions; and the introduction of rating of vacant industrial and commercial sites;

·         Introduce the use of Automated Valuation Models for the valuation of some classes of non-domestic subject;

·         Provide Councils with discretionary power to raise supplementary taxes appropriate to their local area and needs;

·         Value Added Tax should be investigated as a potential funding source, with a proportion of the existing levy being localised to reduce dependence on grant;

·         Consider localising the 12% lottery tax;

·         Provide for policy linked charges which give local government the opportunity to raise income which is directly connected to policy initiatives.

·         Introduce a scheme of green taxes and incentives;

·         Consider, as an alternative to the related proposals under rating, the introduction of a land value tax for vacant sites and agricultural land; and

·         Reform the grant system with features which relate to a local authority’s current situation rather than historic estimates.

ENDS

Notes for the Editor

The Scottish Association of the IRRV has presented the findings of its Committee of Inquiry into Local Taxation in Scotland.  It examined a range of funding options, including local income tax and property-based taxes.

The Executive Summary of the report can be found at: http://www.irrv.net/home/item.asp?ID=1328

The Institute of Revenues, Rating and Valuation (IRRV) was founded in 1882 and is the UK’s leading professional body in the field of local authority revenues, including the associated valuation for local taxation and the administration of housing and council tax benefits.

The Scottish Association of IRRV has around 400 members in Scotland. The IRRV's Scottish Revenues Forum includes membership drawn from all councils in Scotland, as well as representatives from the Assessors’ Association, the Accounts Commission and the Scottish Government.

Contacts for further information:

Jim McCafferty, IRRV Scottish Association President: 07713 116908 (including out of office hours)

Fraser Macpherson, IRRV Development Manager: 07899 877883 (including out of office hours)