Tax powers must be given to those who know local needs

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This article by Alison Payne first appeared in The Times on 4 July 2018.

I recently signed up to receive my garden waste collection permit.  This cost me £25 and is a new policy introduced by the City of Edinburgh Council.  I have concerns about how it may work in practice – especially as it is simply a sticker I place on my bin – but while I don’t object to the payment I do think it would have been considerably simpler to add it onto my council tax bill. 

That, however, is the problem: the council has no power to do so.  Margaret Thatcher’s rate caps policy, updated for the modern era by the Scottish Government, means that local authorities cannot increase council tax beyond the 3 percent cap set by Holyrood.   And it is important to remember that this cap came on the back of a centrally enforced eight-year council tax freeze. 

While we debate at length the fiscal powers of the Scottish Parliament vis-a-vis Westminster, our local authorities and their lack of tax powers are often overlooked.

In Scotland we have two supposed local taxes which are collected by local authorities – Council Tax and Non-Domestic Rates.  The former is restricted by Holyrood while the latter is set and re-distributed centrally.  As a result the only revenue stream councils have proper control over is made up of sales, rents, fees and charges and it is, therefore, unsurprising that many are looking at more inventive ways to increase funds in this area.

This lack of control has also resurrected the debate over a tourism tax, especially in Edinburgh, where hotel residents would pay, say, an extra £1 a night to contribute to the city’s coffers.  Similar schemes are in operation in similarly popular cities such as Paris and Barcelona.

Whether Edinburgh introduces such a tax should be a matter for Edinburgh.  It should be up to local authorities to introduce taxes which they feel are appropriate for their area and if the local electorate disagrees, it can vote them out.

However, once again Holyrood is acting as a helicopter parent and refusing councils the powers they need to go it alone. 

Cosla, the local government body, has called on the Scottish Government this month to “empower local authorities to deliver choice for local communities”.  It has argued that councils should be able to introduce a Tourism Tax if they so wish.  Granting councils these powers is a step in the right direction.