Work-place parking charges
This article by Alison Payne first appeared in issue 24 of Scottish Policy Now.
There has been a great deal of debate about the proposed work-place parking levy. The Scottish Government has been heavily criticised for wanting to introduce a so-called tax on workers. However, despite the hype and media coverage, that is not what the legislation would actually do.
What the policy will actually do is devolve power to local authorities, so they are able to choose whether a scheme is right for their area. Basically, the Transport Bill would be enabling legislation giving an additional power to councils in Scotland. A power that local authorities in England and Wales already enjoy. Devolving the power does not mean schemes will necessarily be introduced.
It will be up to individual councils and councillors to decide whether such levies are appropriate for their area and where and who they cover. Edinburgh may introduce one; Moray may not – or vice versa. Councils may choose to use the power to help raise income or discourage commuting by car.
The merits of the individual schemes are matters for individual councils to discuss and debate, just as they do at present with street parking charges. It is likely that each council will have different ideas about whether and how such a policy could operate in their area.
An urban city centre with a regular public transport system facing problems of congestion and pollution is a very different situation to a rural area with few buses or trains.
It is perfectly possible, and understandable, to be against the introduction of a work-place parking levy in a particular area but believe that it should be a decision made at a local level by the relevant local authority, as opposed to a one-size-fits all centrally imposed position.
Indeed, a parallel could be drawn with the powers that are devolved from Westminster to Holyrood.
Just as the UK Government is not responsible for the changes to income tax in Scotland because it devolved the power to Holyrood, neither would the Scottish Government be responsible for the introduction of a work-place parking charge by devolving the power to local authorities.
The work-place parking proposal is about devolving more power to local authorities to allow them to develop individual solutions for their individual areas, in consultation with the communities they represent. That should be a good thing.
Finance Secretary Derek Mackay told the Scottish Parliament’s Finance Committee on 6th February “The important point is that this is not about a Scottish Government scheme; it is about empowerment of local government.”
Reform Scotland agrees with empowering local authorities which is why we welcome the proposals set out in the budget agreement and subsequent amendments to the Transport Bill.
We believe that local authorities should have the ability to introduce new taxes, such as a work-place parking levy, or indeed a tourism tax, if they feel they are appropriate for their area. Such small schemes also increase diversity and allow councils to learn from the experiences of other local authorities.
However, arguably due to local authorities’ lack of control over fiscal levers such as business rates and council tax, councils are having to rely more heavily on this income stream.
In 2016/17 sales, rents, fees and charges, which cover a wide range of issues from burial fees to music tuition, amounted to £2.5bn. This is more than was raised in council tax and accounts for about 15% of local authorities’ revenue. A recent Audit Scotland report noted that from a sample of 16 local government charges, 11 had been increased by more than the rate of inflation.
Therefore, although local authorities should have the ability to raise a money from a range of charges with the ability to take account of their individual needs and priorities, there is a danger that over reliance on this revenue will lead to increases that are often felt more sharply by less well-off residents.
If the Scottish Government is to truly embrace localism, as Mr Mackay suggests is the intent, it must begin to loosen its vice-like grip on local government in Scotland and devolve local taxes.
Non-domestic rates should be devolved to local authorities in full. This would allow local authorities to vary how and to whom the tax applies based on their own circumstances. It would also ensure that Non domestic rates are the genuinely local tax they are supposed to be. The increase in local financial autonomy and accountability is more likely to give councils an incentive to design business taxation policies and broader local economic development strategies to support the growth of local businesses, encourage new business start-ups and attract businesses to invest since this will benefit the council directly by increasing its income from business taxes. Passing control of business rates to local authorities would also mean giving them control over business rates relief schemes. As a result, it would be up to each individual local authority how the tax operated within their area.
Similarly, local authorities should have complete control over their local tax – including the rates and bands. This would allow individual councils – should they choose – to retain, reform or replace council tax with another form of local taxation. Crucially, this would be a decision about a local tax made by a local authority for its local area, taking into account local circumstances and priorities.
Policies such as the enabling legislation on work-place parking charges that seek to give greater powers to local authorities should be welcomed. However, the test as to whether the Scottish Government truly believes in local empowerment will be whether this is the first of more steps towards greater decentralisation in Scotland.