SCOTLAND could raise hundreds of millions of pounds more by introducing a wealth tax on properties, Common Weal’s head of policy and research has said.
Writing in The National, Craig Dalzell said that the Scottish Government’s refusal to reform Council Tax for a decade is “completely unacceptable” when there is a simple solution.
He argued that the current system is “outdated and badly broken”, and that as well as reforming how local authorities are funded, it would place most of the tax burden on those with more expensive homes.
Currently, Council Tax bands are based on property values from April 1991, but house prices in some areas have since surged.
The Scottish Government recently said that there is no “political consensus” to undertake a revaluation of those bands.
Dalzell argues that instead of the current system, local authorities should tax properties on a percentage of the market value. The Property Tax would generate millions from estates and plush mansions across Scotland, as well as those who own more than one property.
And, extending this Property Tax to include estates and land could work as an additional wealth tax.
A rate of 0.63 per cent, when Common Weal produced a paper on the issue, would "have been revenue neutral compared to Council Tax", Dalzell said.
This would mean a tax cut for eight out of 10 households in Scotland, Dalzell claimed, “as the burden of paying the tax would be placed more fairly on those who lived in the most expensive houses”.
“We calculated that the ‘break even’ point then would have been a house worth something like £400,000. This is based on a flat rate of tax, too,” Dalzell writes.
“We would argue that councils should have the power to add progressive rates on extremely valuable properties, such as £1 million-plus mansions or, as is the case with the current Council Tax, additional multipliers for multiple home ownership.
“This would immediately act as a wealth tax both on the most expensive properties but also on multiple property ownership.”
Council Tax is currently paid by those who occupy the property, many of whom are tenants. Dalzell argues that property owners should pay up instead and tenants would only pay a basic rate.
“Landlords would have to pay any multiple ownership surcharges themselves,” he added.
Extending this Property Tax to include land around large properties could bring in an additional £450m a year, Dalzell says.
“This could be adjusted down to account for subsidies for small farms, or up to better tax the 422 people who own half of Scotland,” he said.
“One of the major advantages of both of these taxes – one that negates objections from both the UK and Scottish Government whenever taxes on the wealth have been suggested – is that they completely bypass the idea that the rich will simply leave the country.
“Recent studies have shown that the idea of ‘millionaire flight’ basically isn’t a thing.”
