Service Transformation

01.02.19

Scottish councils given powers to raise tourism and council taxes as government gets budget backing for ‘triple tax bombshell’

The Scottish Government has paved the way for councils across the country to raise taxes after the SNP brokered a deal with the Green Party, also allowing for a new levy on tourists to be introduced in what one MP called “triple tax bombshell.”

Dubbed the “most significant empowerment of local authorities since devolution,” the government’s budget has passed a key vote in Holyrood, which includes more core funding for councils and extra powers for them to levy local parking and tourist taxes.

Minutes before the budget debate was due to begin, the finance secretary stated he was “pleased to have reached an agreement” with the Greens – allowing him to pass plans originally set out in December and deliver what he called a “substantial devolution of power to local government.”

Green co-convener Patrick Harvie said the deal was the result of “constructive politics” after his party had worked for months to secure extra protection for local services and to push forward local tax reform.

The deal includes £90m for the core local government settlement, a move to three-year local authority budgets, and powers for councils to set a levy on workplace car parking spaces.

Most notably, the 2.99% cap on council tax increases has been lifted to 4.79%, and councils will now be able to set a local ‘tourism tax.’

Edinburgh City Council is reportedly close to becoming the first authority in the UK to impose the overnight tourism tax, and the move will likely lead to English councils calling for similar levies to be introduced.

Mackay revealed his budget last month with plans to give extra funding for education, the health service, and infrastructure, alongside a tax increase for high tax earners.

He added: “The Scottish Government has continued to ensure our partners in local government receive a fair funding settlement despite further cuts to the Scottish budget from the UK Government.”

The Conservatives, Labour and Liberal Democrats said they would not support the proposals because of a £319m cut to council budgets outlined in the plan – a figure the government contests and also due the SNPs refusal to call another referendum on Scottish independence.

Tory finance spokesperson denounced the deal, calling it a “triple tax bombshell,” and said Derek Mackay and Nicola Sturgeon had “torn up the promises” made at the last election.

The Scottish Government also revealed it has agreed to cross-party talks on replacing council tax and, if an agreement could be reached, it would publish legislation by 2021.

Image credit - Jane Barlow/PA Wire/PA Images

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