Exclusive:'Postcode lottery' fears over SNP plans to hand councils 'ominous' wealth tax powers

Business leaders have warned over a “kaleidoscope of differing local taxes” if SNP ministers introduce new revenue-generating powers for councils.

Fears have been raised over a “postcode lottery” if SNP ministers press ahead with handing new tax powers, including wealth levies, to local councils.

A leading business group has warned over a “kaleidoscope of differing local taxes” if the Scottish Government follows through with a commitment to explore further new taxes for local government.

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First Minister John Swinney and finance secretary Shona RobisonFirst Minister John Swinney and finance secretary Shona Robison
First Minister John Swinney and finance secretary Shona Robison | Andrew Milligan/PA Wire

With the tourist tax and a potential workplace parking levy set to hand local authorities a new revenue stream, the Scottish Government’s tax strategy commits to “explore the creation of more revenue generating powers for local authorities”.

SNP ministers pledged to reform council tax in 2007, but progress has stalled, despite the Scottish Government admitting the charge is regressive and unfair.

Finance Secretary Shona Robison has now indicated that reform will not happen before the 2026 election, with Cosla resource spokesperson, Katie Hagmann, leading negotiations with political parties to build a consensus for a way forward ahead of next year’s election.

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The Scottish Government’s tax strategy also points to potential wealth taxes, a levy on people’s net worth or assets, being a key ask of Westminster after 2026. But Holyrood could still introduce a tax on wealth without the UK government’s permission, provided it is implemented as part of the local tax system.

Business leaders have warned a new suite of tax powers handed to local authorities could put up further barriers to trade - and provide added costs to both firms and consumers.

David Lonsdale, director of the Scottish Retail Consortium, said: “The Scottish Government’s new tax strategy says ministers will explore with councils the creation of more revenue generating powers, as well as wealth taxes.

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David Lonsdale, director of the Scottish Retail ConsortiumDavid Lonsdale, director of the Scottish Retail Consortium
David Lonsdale, director of the Scottish Retail Consortium

“This sounds somewhat ominous. Early clarity and dialogue with business over what is being looked at would be helpful, along with a sense of any potential impact on firms or consumers.”

Mr Lonsdale added: “Councils have already been handed control over a swathe of new taxes, including workplace parking levies, visitor levies, and the ability to charge higher council tax on second homes. Other levies are on the cards, including on cruise ships and a possible carbon land tax.

“A kaleidoscope of differing local taxes may help plug gaps in councils’ finances. However, depending on the nature of the tax or levy, it can also add complexity and cost to the running of a retail business or impinge on household incomes, leaving shoppers with less disposable income to spend in stores.”

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The Scottish Conservatives have warned about different levels of tax being imposed in different parts of the country.

Conservative shadow business, economy, tourism and culture secretary, Murdo Fraser, said: “The SNP Government have failed to pass on funding to councils for years, but now they expect them to plug the gap by imposing a swathe of new taxes.

Scottish Tory MSP Murdo Fraser Scottish Tory MSP Murdo Fraser
Scottish Tory MSP Murdo Fraser | Contributed

“Ever-higher taxes may be the SNP’s answer to everything, but they hit households and undermine businesses. Adding more of them at council level will just discourage investment, deter visitors and create a postcode lottery.”

A Scottish Government spokesperson said: “We are invested in delivering fair and sustainable local taxation, with decisions grounded in evidence.

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“Our tax strategy emphasises the importance of having a tax system informed by robust evidence, ensuring proposals are proportionate to the benefits they deliver. We will continue to work in partnership with all stakeholders, including those in local government and the private sector.”

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