Reform Scotland believes that each tier of government, be it Westminster, Holyrood or local authorities, should as far as possible be responsible for raising the money they spend. The recommendations set out in Local Taxes demonstrate how we could move in this direction for local government.
First, under the current powers Holyrood has we argue that business rates should be devolved in full to local government. To ensure that this policy did not create a situation where some councils suddenly receive more money and others less, Reform Scotland recommends that, in the first year of the operation, the Scottish Government grants to each council should be based on the grant they received the previous year, less the business rates collected from the council area in that previous year. Councils would then receive the revenue raised from business rates in their area, with the remaining part of their revenue grant adjusted to ensure no council was better or worse off.
Reform Scotland also argues that council tax should be fully devolved to local councils, giving them the freedom to set the rate and decide to whom and how it applies.
Passing control of these taxes to local authorities would increase the proportion of their own income they are responsible for to 33 per cent.
It is impossible currently for the Scottish Parliament to devolve further tax powers to local authorities because the Scottish Parliament itself has no other tax powers. However, if the Scottish Parliament had the powers set out by Reform Scotland in Devolution Plus, we think there is merit in examining whether some location specific taxes, such as stamp duty, could be devolved as well as passing councils control of council tax benefit and housing benefit as these are areas which are largely local authority responsibilities.