Failure to deal with revaluation means council tax will remain ‘detached from reality’

Council tax in Scotland will remain ‘detached from reality’ unless ministers commit to a revaluation of properties to ensure they pay the correct amount of tax.


The Chartered Institute of Taxation’s Low Incomes Tax Reform Group (LITRG) was responding to a Scottish Government/COSLA consultation on proposals to increase the amount of tax paid by homes in the most expensive tax bands1.


While LITRG acknowledged that the proposal to increase the amount of tax paid by homes in council tax bands E to H would help to address the regressive nature of the council tax system, it added that it was  ‘extremely disappointing’ that the measures did not include plans for a property revaluation, warning that a failure to do so ‘ignores (a) fundamental problem with council tax – the fact that it is based on 1 April 1991 property values’.


LITRG said that it would like to see a revaluation take place and for ministers to then commit to undertaking more frequent valuations, so the amount of tax paid remains tied to up-to-date property values.


Joanne Walker, LITRG Technical Officer, said:


“These measures will help to make council tax somewhat more progressive but without a full revaluation of properties in Scotland, it will be hard to call the tax fair.


“New and more frequent valuations, as are happening in Wales 2, would help to ensure that the amount of tax paid is based on more accurate and up to date house values.


“The fact that council tax remains based on house prices from over 30 years ago means there are lots of inconsistencies in the way homes are valued.


“For the tax to be seen as being fair, it must tax the base it was meant to tax (in this case, property) and that base must be accurately valued. However, the proposal remains based on property values that are outdated, inaccurate and, in the case of homes built after 1991, hypothetical.


“Because of this there will be a significant proportion of homes that are allocated to the wrong council tax band, meaning that these proposals will not affect all the properties they are intended to, and others that they should not.


“In that sense, it is hard to think of another tax so detached from reality”.