Have Your Say: ALLIANCE response to the Future of Council Tax consultation

The ALLIANCE are seeking member views to shape our position on Council Tax reform in both the short term and into the future.

The Scottish Government are currently consulting on the Future of Council Tax. At this stage they are not consulting on a complete replacement, but instead on how the current system can be reformed to be fairer. The ALLIANCE are taking this opportunity to engage with our own membership to further develop our position on Council Tax and local taxation reform more broadly. This includes a member engagement meeting on Thursday 15 January from 2pm to 3.30pm. You can register via Zoom here.

Following the scrapping of plans for a National Care Service, social care in Scotland will continue to be primarily funded and delivered by local councils. In addition to social care, councils also provide essential services including schools, leisure facilities and rubbish collection, and maintain parks and roads.

Despite the importance of these services, local council budgets have been under pressure for many years, leading to cuts to some services and tighter eligibility criteria for others. Although Council Tax might be assumed to be the primary way that local councils are funded, it in fact makes up around 19% of the total local government funding in Scotland, or nearly £1 in every £5 in their budgets.

Council Tax is nonetheless an important part of how councils are funded. Despite a detailed report by the Commission on Local Tax Reform in 2015 and a consensus the current system is not fair and does not work, only very small changes have been made to Council Tax since it was first introduced. Due to flaws in how Council Tax is designed and managed, it is very difficult for councils to use it to fairly raise funds. This is because of two things:

• Council Tax is based on 1991 property values, which means it does not account for changes in property values in the decades since.
• The banded structure means that as a proportion of property value, less valuable properties pay more tax, and the most valuable pay very little tax.

Together, these mean that failing to increase Council Tax results in cuts to services that the least well off (including disabled people, people living with long term conditions, and unpaid carers) rely on, but when it is increased, those same groups are most strongly impacted. The ALLIANCE have made this point through our budget work in recent years, arguing this is a problem for funding essential services like social care, and have called for Council Tax to be reformed. Until now we have not however taken a position on the exact details of reform.

The Scottish Government are consulting on whether to revalue properties, and how often they should be revalued in future to keep Council Tax up to date. They also want to hear views on whether bands should be set nationally or locally, if the number of bands should change, and what support and reliefs should be available following changes. They suggest the following options could follow a revaluation (the first two would minimise changes to bills, and the second two would maximise the fairness of bills):

• Keep the current 8 tax bands
• Increase to 12 bands, but keep tax differences between bands relatively small, reducing tax rate for lower bands and increasing it for higher bands
• Increase to 12 bands, but allow for bigger tax differences between bands, further reducing the tax rate for lower bands and increasing it for higher bands
• Increase to 14 bands, similar to the above option but with an additional lower and upper band rate

Earlier this year, Tax Justice Scotland (which the ALLIANCE is a member of) published a paper setting out some possible principles for reform. The paper suggested a Reformed Property Tax that would be set by local councils, is proportional to property value, based on periodically reviewed valuations, and that is flexible to individual household circumstances. It also argued that keeping a property-based tax is important for tackling wealth inequality, whilst income is already taxed and would be very complex to tax again locally.

The ALLIANCE would like to hear members views on some of the key issues and proposals underpinning both the Scottish Government’s consultation, and the Tax Justice Scotland idea paper. This will help inform our own response and how we engage with local tax reform moving forward.

Members can use the form below to provide input. This form is intended for relatively short answers. If you have detailed input you would like us to consider, please email this to policy@alliance-scotland.org.uk. The deadline for input is Friday 16 January 2026. We are also hosting an online member engagement event on Thursday 15 January from 2pm to 3.30pm. You can register via Zoom here.

Except where we are given explicit permission to do so, we will not identify the source of member contributions if we include them in our response. You can find our full Privacy Policy here.

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