There is no “magic bullet” solution to the issues posed by the current council tax system, an expert report for the body tasked with finding an alternative to the council tax has warned.

The review of local government funding round the world, conducted by Professor Kenneth Gibb of the University of Glasgow along with Linda Christie of the University’s Policy Scotland institute, was carried out for the Commission on Local Tax Reform, which is due to report to the Scottish Government in the autumn.

Among the report's conclusions are:

  • There are many different forms of local taxation around the world, but common to all is the difficulty in delivering reform. The council tax has had inbuilt problems from day one, but the unwillingness to revalue and modify the system has stored up even greater problems for today’s policy makers.
  • Although local property taxes are used very widely, many people do not understand why they are being taxed, or what they are being taxed on. Is it a tax on housing or wealth or is it a charge for services?
  • Property tax is a good local tax because it is stable, difficult to avoid, and can have desirable impacts on housing markets, but it can be unpopular with the public because it is so visible, and because it is not directly linked to current income.
  • Local income tax is also widely used, and because it is levied on current income it is often thought to be fairer, but it can mean fluctuating income streams for local authorities, who often have little flexibility to vary rates locally.
  • Additional taxes can be difficult and expensive for local authorities to manage, and for the taxpayer to accept.
  • It is clear there is no magic bullet, and past experience from the UK and across the world shows that reform is always going to be difficult and will inevitably be bound up with the previous experiences and traumas of past reform. So whilst the current council tax has many acknowledged deficiencies, change and reform is a major undertaking.

Marco Biagi MSP, Minister for Local Government & Community Empowerment, who co-chairs the Commission along with Councillor David O’Neill, President of the Convention of Scottish Local Authorities, greeted the review as an "important and welcome contribution to the work of the Commission, shedding light on the challenges faced by many countries across the world in their attempts to find a local tax system that is fair and fit for purpose”.

He continued: “We can clearly see that we are not alone in facing these challenges and there is no perfect ready-made solution out there. This adds to the importance of our work that will allow everyone to understand what any alternative local taxation systems would mean to the people of Scotland.”

The Commission is holding a series of “listening events” across Scotland during August and September with the aim gathering the views of as many members of the public as possible. Details are on the Commission’s website

Click here to access Professor Gibb's review.