Scottish Government urged to scrap council tax
The current council tax system should be scrapped and alternatives put forward to voters at the Holyrood election in May, the Commission on Local Tax Reform has said.
It considered three replacement options, with one based on property, one on land and the third on income.
But the report did not come out in favour of any one option, instead urging political parties to put forward their proposals ahead of next year's Scottish Parliament ballot.
The Commission was set up jointly by the Scottish Government and the Convention of Scottish Local Authorities (Cosla) to look at fairer alternatives'' to council tax, which has been frozen since 2007.
The current system raises around £2 billion to help pay for local government expenditure such as refuse and recycling, education, roads maintenance and leisure facilities.
The Commission analysed the impact on households of the use of alternative systems to raise a similar amount.
These included a property tax which would be based on the value of the property; a land value tax based on the value of land only; and a local income tax which would raise revenue based on a householder's taxable income.
Marco Biagi, Local Government Minister and co-chair of the Commission, said: In publishing our report today, we put to the Scottish people the most comprehensive quantitative analysis ever undertaken to understand the links between different forms of local taxation, backed by an extensive programme of public engagement.
From the outset - having agreed that the present system is unfair and in need of reform - we have worked together in a spirit of consensus to understand the alternatives available to us and to put to the people of Scotland a report that clearly sets out the steps that can be taken to deliver change.
It is now up to politicians from across the political spectrum to take today's report and to use it to put to the Scottish people alternatives that are fair, workable and empowering for local communities.''
The commission's analysis looked at whether a property tax could be structured in a way that is progressive with respect to both property values and to net household incomes.
It found that creating a property tax that is proportionate to property values, based on the example of 2013/14 figures, would require tax on the highest value homes to be 15 times the tax on the lowest value homes.
This system would still result in lower income households spending a greater share of their income on local tax than higher income households,'' it said.
The report added: Our report suggests that even with substantially higher rates for the most expensive properties, a property tax cannot be progressive with respect to income for all households. By itself, a property tax cannot meet this test of fairness.''
It continued: Our analysis therefore indicates that a more proportionate property tax, implemented alongside a more progressive system of income and needs-based reliefs, would be much fairer that the present council tax.''
In its conclusions, the report stated: The predominant view of the Commission is that any reform of local tax has to continue to include recurrent tax on domestic property, and we recognise that, as with all available options, there are difficulties that must be addressed if any system is to be seen as fair and accepted by the public.''
It went on: The predominant view of the Commission is that local government's tax base should, if it could be proved feasible, be broadened to include income.
Income is widely perceived to be a fairer basis on which to levy a tax, although a locally variable income tax presents substantial administrative challenges.''
David O'Neill, president of Cosla and co-chair of the Commission added: We have conducted more in-depth analysis of potential alternatives to the present system of council tax than ever before, with the aim of promoting understanding and stimulating debate among the public and politicians on the future of local taxation.
As a result of our work, there is now a real prospect that Scotland's politicians are on the cusp of delivering lasting and meaningful reform.
The opportunity to deliver lasting reform is one that must not be missed.''