by EWAN LAMB
Top brass at Scottish Borders Council have warned a Government commission investigating a possible replacement for the council tax of a possible migration of Borderers into England for financial gain if a system of local income tax is introduced.
The paid public officials who make up SBC's Corporate Management Team have lodged a highly subjective six-page submission on behalf of the local authority with the Commission On Local Tax Reform which is expected to report in the autumn.
But although the future of local government finance in Scotland is regarded as one of the most important issues facing the country's 32 councils there has not been a single contribution to the commission from any Borders councillor or the various political groups at Newtown St Boswells. The Tories nationally have boycotted the initiative by the SNP Government to consider a "fairer" system of paying for local services.
One observer of the Borders local government scene commented: "Regrettably this demonstrates just how SBC is officer-led with our elected members apparently unable or unwilling to make statements or air their views in public. Surely we have the right to know whether local councillors are in favour of keeping the council tax or replacing it with some other system".
The Corporate Management Team certainly pull no punches in their hard-hitting statement to the commission whose members include Borders Liberal Democrat councillor Catriona Bhatia.
They suggest the commission carries out more detailed research into other forms of local taxation, particularly land tax, tourist tax, and Development Land Tax. The submission, signed by chief executive Tracey Logan, claims any proposal to introduce a local income tax would have to address a list of issues.
According to the Borders evidence: "As the tax is on people and not property there is a danger that the tax will be seen as an additional tax rather than replacing the council tax. Scotland may be viewed as an area of hihger taxation making it less attractive for potential and prospective residents as well as businesses.
"This is even more of a concern in the Scottish Borders due to the area bordering England. There is a risk that people (especially those near the border) would migrate into England for financial benefit. A tax based on personal income may encourage tax avoidance behaviour especially by those able to obtain specialist tax advice."
It is also claimed that students who are currently exempt from council tax may find themselves paying tax on part-time earnings. This may have an impact on where students choose to study as well as where they choose to work after qualifying. It may also have the indirect effect of increasing the level of student loans.
"Many young people living in the Scottish Borders and Scotland who do not currently pay council tax may consider leaving if the income of a local income tax on take home pay is significant and is not a factor in England", adds the submission. "Businesses may look to relocate elsewhere due to higher personal taxation, higher taxation for their employees and the administrative complication of two tax rates. There is potential for businesses to be targeted to relocate especially into the North of England which this local authority borders. Finally, local people may object to paying the same level of taxation for services whose quality is perceived to vary across Scotland."
The officers go on to argue that a property-based system like the council tax presents advantages for rural areas such as the Scottish Borders.
"While recognising the current system is in need of reform and some modernisation, in general the current system benchmarks well against the principles of effective taxation. It is very stable, has high collection levels, has low collection costs at around two per cent and is generally accepted and understood by large sections of the local electorate.
"The overall fairness and ease of understanding could be improved by undertaking wholesale revaluation (of properties) with regular revaluations thereafter to maintain a fit for purpose framework."
It is also suggested that a fair system of council tax banding is pivotal to a progressive system of local taxation. As such the number and widths of the council tax bands require to be amended to make the system more progressive. "Consideration should be given to increasing the number of bands at both the top and bottom ends and the ratios between bands with a review of bandings being undertaken at each valuation cycle."
The commission/Scottish Government also needed to work towards lifting the council tax freeze to ease the pressure facing local government services, particularly in the Borders with respect to the increasing number of older people requiring care.
The document concludes: "It is desirable, particularly in rural areas, that the administration of local taxation is carried out locally rather than being centralised. There are relatively high value jobs involved in the land taxation process and their loss would adversely impact on local economies particularly in rural areas."
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