With the Scottish Parliament elections less than a week away, it is now clear what the parties’ proposals for reforming local taxation are.

All of the parties represented in the 2011-16 Holyrood Parliament, other than the Conservatives, signed up to a Commission on Local Tax Reform. This did not come up with any firm proposals, but suggested that the Council Tax “must end.” It suggested that a new system must include a recurrent property tax, but that it would be desirable to extend the local tax base to include income. The Commission described land value taxes as being “promising” but required more work.

So how have the parties responded to the Commission?

The SNP was first off the block. It proposes a reform of the Council Tax based on taxing the properties in the top four bands more heavily. This proposal would make the system somewhat less regressive. It would affect the top quarter of properties nationally, but the proportions vary greatly between local authorities. Only 10% of properties on Eilean Siar and 15% in Dundee fall into the top four bands. But in East Renfrewshire and East Dunbartonshire most properties are in the top four bands.

The SNP does not favour a revaluation, so the tax will continue to be based on 1991 property values. The Commission on Local Tax Reform suggested that 57% of properties are currently in the “wrong” band.

The SNP is clearly sensitive to the “asset rich, income poor” issue and intends to exempt people on below median incomes from these increases. The party also intends to increase the child allowance within the Council Tax Reduction Scheme by one-quarter, which would help low income households with dependent children.

Scottish Labour would conduct a revaluation and favours replacing the Council Tax with a property tax consisting of two elements. The first is a flat rate charge per property of £450. The second is a tax on the proportion of the property value – 0.35% up to £180,000 rising to 0.9% over that. There would be a maximum bill of £3,000. The effect of the flat rate charge and the maximum bill very much blunt the progressive aspects of the proposed reform.

The Scottish Conservatives describe the Council Tax as being a “remarkable success” and propose to limit reform to increasing the tax on properties in the top two bands – that is the most expensive 6% of properties.

The Scottish Liberal Democrats have abandoned their long-established policy of local income tax, and now favour a land value tax in the long-run.

The Scottish Greens also favour a land value tax in the longer term, but would focus on a transition from the Council Tax to a Residential Property Tax over the lifetime of the next Parliament. This would be based on a percentage value of each property, but with a “tax free allowance” on the first £10,000 of the property value. In contrast to the Council Tax, it would be the owner (rather than the tenant) who would be expected to pay.

These are brief summaries of the parties’ proposals. More detail can be found in the briefing that I have prepared for Scottish Property Tax Reform. It can be read here.

After more than 20 years of the Council Tax there does seem to be widespread agreement that the Council Tax must at least be reformed. A decade ago two of the parties favoured local income tax, but now all accept that there must be a recurrent property or land tax. Interestingly both the SNP and Labour are also considering a tax on unused land.  The apparent timidity of the SNP’s proposals attracted much criticism when they were announced, but I have explained in another blog why politicians’ caution is understandable, and that truly radical reform requires a process of consensus building.

Previous attempts at reforming local taxation have been abandoned. It seems that in the next Scottish Parliament the process of reform will begin.