Council tax to increase ten times more for richest households than poorest under SNP reform proposal, Resolution Foundation calculates

The average council tax increase would be ten times greater for the richest tenth of households than the poorest half of households under SNP’s proposals for council tax reform, according to a new report.

The ‘Battle of the Bands’ report by the Resolution Foundation shows that the average council tax increase for the richest tenth of households would be £125 whereas the average across the bottom half of the income distribution would be £11.

The think tank, which works to raise the living standards of those on low to middle incomes, has modelled the impact of the SNP’s council tax plans, along with those proposed by Scottish Labour and the Scottish Greens.

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It has welcomed the all the parties’ proposals to improve the proportionality of council tax to property values.

The report shows the current band structure disproportionately taxes those in lower value homes, with a tax rate of over 1.5 per cent of a property’s value in the cheapest homes compared to less than 0.1 per cent in the most expensive homes.

The reforms proposed by the SNP maintain the council tax system while increasing council tax for those in the top bands (E-H), keeping lower bands the same and boosting the per-child council tax reduction allowance.

The Resolution Foundation finds concludes this would be a progressive increase, with the richest fifth of households expected to account for half of the £100m extra revenue.

It adds that some households would be better off as a result of the more generous council tax reduction scheme.

The report finds that the Scottish Labour and Green proposals are also progressive and would mean higher tax bills for those in expensive properties and lower bills for those with lower value properties.

Labour’s system aims to be revenue neutral in the first year, while the Scottish Greens’ proposals are expected to raise significantly more than any the other policy packages.

Labour and Green plans include a revaluation of properties not proposed by the SNP, which would address the Commission on Local Tax Reform’s finding that the majority of properties in Scotland are currently in the wrong band.

Resolution Foundation economic analyst Adam Corlett said: “It’s encouraging that while the proposals offered by Scottish parties differ in design and by the amount they raise, all improve the proportionality of the system.

“The upcoming Scottish election looks set to be a key battleground for progressive taxation of properties – as well as incomes. It’s a debate that will likely benefit lower income households in the round, whichever party prevails.”