Council tax - revaluation and reform: key findings summary

Impacts on bills in different places

The impact of reforming council tax would depend on more than just any new property valuations, tax bands and tax rates. It would also depend on whether and how the grant funding provided to councils on top of their own tax revenues was adjusted, and how councils responded to the new council tax system and grant allocations. If, for example, grant funding was left unchanged, and councils wanted to maintain their spending on services following council tax reforms, each would need to raise as much council tax and so charge the same average bill as in the absence of reform. In this case, those councils seeing more properties in lower bands and/or facing lower relative tax rates would need to raise their Band D rates, while those seeing more properties in higher bands and/or facing higher relative tax rates could reduce their Band D rates. Council tax reform would redistribute council tax bills within council areas, but not across them.

There are a range of different options for grant adjustment, and for the ways in which councils could respond. Currently, the Scottish local government finance system accounts for about 60% of the differences in councils’ tax bases when determining how much grant funding they are provided with; however, other approaches would be possible. The higher the percentage accounted for, the more average bills would change for different areas – falling more in council areas where more properties move down bands and/or face lower tax rates relative to a Band D property, and rising more in areas where more properties move up bands and/or face higher relative tax rates.

This means under a pure revaluation, average bills would fall in areas where property values have not kept pace with the average increase seen across Scotland. We find that this includes Aberdeen City and Aberdeenshire, as well as much of South West Scotland. Average bills would rise in areas where values have increased by more than average. We find that this includes the Lothians and much of the Highlands and Islands.

Under the less regressive systems, our analysis finds that changes in average bills would vary more significantly across areas, falling in more deprived areas and increasing in more affluent areas. At the council level, we estimate that they would fall, on average, in most of Aberdeen City and Aberdeenshire, and the more deprived council areas of the Central Belt and South West Scotland. We estimate that they would increase in the Lothians, much of the Highlands and Islands, and in East Dunbartonshire and East Renfrewshire.