Holyrood '16 polls and predictions

[glasgow-sheep]

Have to laugh at all the unionist politicians this week. They've spent the last year telling how a CT freeze hurts the poor now it looks like they're going to spend the next year saying how great the freeze was before the SNP changed it. SNP BAD.

I'll be voting SNP but it's not just unionists who are criticising them over this. The council freeze was terrible for many reasons, the council tax itself is worse and the SNP agreed, in fact argued it had to go. Now they have announced plans that solve none of the problems and makes the most minimal effort to be even remotely progressive. They have rightly be criticised and just because some of that criticism has come out of unionist mouths doesn't make it invalid.

#snpgood #slabbad is just us pathetic, counter productive and aimlessly tribal as #snpbad

[Baxter Parp]

I'll be voting SNP but it's not just unionists who are criticising them over this. The council freeze was terrible for many reasons, the council tax itself is worse and the SNP agreed, in fact argued it had to go. Now they have announced plans that solve none of the problems and makes the most minimal effort to be even remotely progressive. They have rightly be criticised and just because some of that criticism has come out of unionist mouths doesn't make it invalid.

#snpgood #slabbad is just us pathetic, counter productive and aimlessly tribal as #snpbad

Which problems does it not solve?

[kevthedee]

I'll be voting SNP but it's not just unionists who are criticising them over this. The council freeze was terrible for many reasons, the council tax itself is worse and the SNP agreed, in fact argued it had to go. Now they have announced plans that solve none of the problems and makes the most minimal effort to be even remotely progressive. They have rightly be criticised and just because some of that criticism has come out of unionist mouths doesn't make it invalid.

#snpgood #slabbad is just us pathetic, counter productive and aimlessly tribal as #snpbad

I for one thought the the SNP would wait until after the election before telling us about the council tax freeze ending so credit to them for doing it now.

As for what problems it will solve,it will give local council's extra funds to use,upto £70m was reported as the figure.

As we all know council services are facing big cuts so any extra funding can only be a good thing and if used correctly will help some of these services facing the cuts.

[invergowrie arab]

Which problems does it not solve?

That it is a regressive tax where the top end only pay around 3 X bottom end, around 50% of people pay the wrong amount, collection is notoriously difficult and the tiny amount it raises means the gap needs to be plugged by central govt which undermines local democracy.

[Baxter Parp]

That it is a regressive tax where the top end only pay around 3 X bottom end, around 50% of people pay the wrong amount, collection is notoriously difficult and the tiny amount it raises means the gap needs to be plugged by central govt which undermines local democracy.

How much of that did you make up?

Collection is not notoriously difficult - you know exactly where they live for a start so it's harder to avoid than an income tax.

What does 50% of people pay the wrong amount even mean?

It's a progressive tax - you pay progressively more the higher the value of your house.

Do you want to have another shot at this?

[renton]

How much of that did you make up?

Collection is not notoriously difficult - you know exactly where they live for a start so it's harder to avoid than an income tax.

What does 50% of people pay the wrong amount even mean?

It's a progressive tax - you pay progressively more the higher the value of your house.

Do you want to have another shot at this?

It's fair to say that due to the lack of re-evaluation of the bands since 1992 - and the several massive housing bubbles since then - that many people's houses are probably not paying the correct amount, or are in the wrong band, etc.

As for it being progressive, well, no. Not in absolute terms, as it's not intrinsically linked to your ability to pay - the definition of progressive. There will be plenty of people who live in big houses with little income (pensioners, widowers, people making less money than they did previously etc) or folk who make a good income but choose to live in a small flat - and inevitably you'll get folk who's income dwarves the cost of available housing stock as well. The changes the SNP put in yesterday were progressive changes in a relative sense i.e. the tax will be less regressive under their plans than it would be otherwise - but it's still not, nor ever will be, a properly progressive form of taxation.

Let's not treat the SNP plans as some kind of manna from the left. They went for a small, progressive change to Council tax: enough so that, generally speaking, richer people pay more (there is an exemption for pensioners who may have little income but a big house). That in itself paints Labour into a corner, no one wants to introduce a new system 60 days out from an election, and I reckon Labour were planning a plan for a replacement while maintaining the freeze: Their income tax plan is their big tax and spend offer. So it's good politics, and the promise to reinvest in education is a good piece of politics and good for the nation overall, no one can complain about that.

However, as pointed out - it's terrible for local democracy (centralised collection and plowing of money into education from Edinburgh), it's only slightly more progressive than the current system and still open to all the same shortcomings of the current system and it's frankly dissapointing to a large part of the SNP base (and others, like me) who wanted to see a real departure from current thinking.

Still, there are two things buried at the bottom that give me a wee bit of hope.

One is the consultation to levy a tax on undeveloped and derelict land. This will stop land hoarding and promote development. It's also a proto-LVT, narrowly defined. What that gives us, beyond it's own intrinsic value, is experience of collecting a tax based on land value, promoting appropirate behaviours and ironing out the issues with an LVT, which would open the door to a more universal adoption of that type of tax down the line.

Two, is the exemption from higher band payments by pensioners. The other big issue with LVT to date has been how you deal with low income, high wealth owners. Eventually, that form of tax would prmote a migration to more affordable properties, but in the short term would create a shock in the housing market for that demographic. Being able to demonstrate that you can successfully exempt them now, removes a practical difficulty to doing so later, under an LVT.

Taken together, it's the smaller measures that if enacted, open a path to a more radical system down the line that I find encouraging.

[Baxter Parp]

It's fair to say that due to the lack of re-evaluation of the bands since 1992 - and the several massive housing bubbles since then - that many people's houses are probably not paying the correct amount, or are in the wrong band, etc.

Can you give any actual instances of this? How much of a problem is it and how often should we revalue if it is a problem?

As for it being progressive, well, no. Not in absolute terms, as it's not intrinsically linked to your ability to pay - the definition of progressive. There will be plenty of people who live in big houses with little income (pensioners, widowers etc) or folk who make a good income but choose to live in a small flat - and inevitably you'll get folk who's income dwarves the cost of available housing stock as well. The changes the SNP put in yesterday were progressive changes in a relative sense i.e. the tax will be less regressive under their plans than it would be otherwise - but it's still not, nor ever will be, a properly progressive form of taxation.

"A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate."

In absolute terms, yes it is. The term "progressive" has nothing to do with income.

[welshbairn]

2.4 Council Tax is based on the value of the property occupied by the household, so the connection between how much a household has in income and how much it pays in tax will always be looser than if the tax were to be based directly on income. Many reasons can be advanced for taxing property rather than, or alongside income, but in the case of the present Council Tax, the evidence shows that the amount being charged is simply too disproportionate to income to be justified. Paying Council Tax bills costs middle income households 4% of their income on average, compared to 2% for the average highest income households.

http://localtaxcommission.scot/html-version-of-just-change-a-new-approach-to-local-taxation/02-the-case-for-change/

[Baxter Parp]

Just to give my own view, I'm disappointed that we didn't get the radical solution a lot of us wanted but I can see why the SNP have gone for reform rather than revolution. The cost of a local income tax would have been a consideration - HMRC would have to change their software and IT contracts are always wildly expensive in addition they would have to shovel money to the likes of KPMG for consultation which the SG would ultimately have to pay for. Then there would be negotiating with the Councils how much control they have over the rate and future rises. The infrastructure for the Council Tax already exists and people are familiar with it so introducing a radical reform in an election year would be a hell of a risk too. All in all, I can see that what they did was sensible but dull.

[renton]

Can you give any actual instances of this? How much of a problem is it and how often should we revalue if it is a problem?

"A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate."

In absolute terms, yes it is. The term "progressive" has nothing to do with income.

That's an incredibly narrow definition of 'progressive' that doesn't take into account the overall systemic effects (and indeed, proportional value) of taxation on someone. You might pay more on a higher band house, but if your other assets, income etc are much larger still - then the overall tax burden as a percentage of your income/wealth will be lower than someone in a middle band house/middle band income - that makes the overall effect regressive. The changes announced on Wednesday move the burden from 3 to 1 to 3.7 to 1 across the bands. Wightman calculates that in order to create an overall progressive system of CT, the variance from top to bottom would need to be 15 to 1.

[welshbairn]

Just to give my own view, I'm disappointed that we didn't get the radical solution a lot of us wanted but I can see why the SNP have gone for reform rather than revolution. The cost of a local income tax would have been a consideration - HMRC would have to change their software and IT contracts are always wildly expensive in addition they would have to shovel money to the likes of KPMG for consultation which the SG would ultimately have to pay for. Then there would be negotiating with the Councils how much control they have over the rate and future rises. The infrastructure for the Council Tax already exists and people are familiar with it so introducing a radical reform in an election year would be a hell of a risk too. All in all, I can see that what they did was sensible but dull.

Surely they'd just have to raise the percentage of income tax and distribute the extra to the councils?

[Baxter Parp]

Surely they'd just have to raise the percentage of income tax and distribute the extra to the councils?

I'm sure the councils would happily agree to whatever share of the revenue the Scottish Government considered fair. No doubt they would also rejoice at the lack of local control over tax rises.

[welshbairn]

I'm sure the councils would happily agree to whatever share of the revenue the Scottish Government considered fair. No doubt they would also rejoice at the lack of local control over tax rises.

If the councils could determine their own income tax surcharge it would just mean more tax codes, they wouldn't have to totally overhaul the IT systems. (imo)

[sparky88]

It's fair to say that due to the lack of re-evaluation of the bands since 1992 - and the several massive housing bubbles since then - that many people's houses are probably not paying the correct amount, or are in the wrong band, etc.

As for it being progressive, well, no. Not in absolute terms, as it's not intrinsically linked to your ability to pay - the definition of progressive. There will be plenty of people who live in big houses with little income (pensioners, widowers, people making less money than they did previously etc) or folk who make a good income but choose to live in a small flat - and inevitably you'll get folk who's income dwarves the cost of available housing stock as well. The changes the SNP put in yesterday were progressive changes in a relative sense i.e. the tax will be less regressive under their plans than it would be otherwise - but it's still not, nor ever will be, a properly progressive form of taxation.

Let's not treat the SNP plans as some kind of manna from the left. They went for a small, progressive change to Council tax: enough so that, generally speaking, richer people pay more (there is an exemption for pensioners who may have little income but a big house). That in itself paints Labour into a corner, no one wants to introduce a new system 60 days out from an election, and I reckon Labour were planning a plan for a replacement while maintaining the freeze: Their income tax plan is their big tax and spend offer. So it's good politics, and the promise to reinvest in education is a good piece of politics and good for the nation overall, no one can complain about that.

However, as pointed out - it's terrible for local democracy (centralised collection and plowing of money into education from Edinburgh), it's only slightly more progressive than the current system and still open to all the same shortcomings of the current system and it's frankly dissapointing to a large part of the SNP base (and others, like me) who wanted to see a real departure from current thinking.

Still, there are two things buried at the bottom that give me a wee bit of hope.

One is the consultation to levy a tax on undeveloped and derelict land. This will stop land hoarding and promote development. It's also a proto-LVT, narrowly defined. What that gives us, beyond it's own intrinsic value, is experience of collecting a tax based on land value, promoting appropirate behaviours and ironing out the issues with an LVT, which would open the door to a more universal adoption of that type of tax down the line.

Two, is the exemption from higher band payments by pensioners. The other big issue with LVT to date has been how you deal with low income, high wealth owners. Eventually, that form of tax would prmote a migration to more affordable properties, but in the short term would create a shock in the housing market for that demographic. Being able to demonstrate that you can successfully exempt them now, removes a practical difficulty to doing so later, under an LVT.

Taken together, it's the smaller measures that if enacted, open a path to a more radical system down the line that I find encouraging.

Excellent post, best analysis I've get seen on the SNP council tax proposals.

[Ad Lib]

That's an incredibly narrow definition of 'progressive' that doesn't take into account the overall systemic effects (and indeed, proportional value) of taxation on someone. You might pay more on a higher band house, but if your other assets, income etc are much larger still - then the overall tax burden as a percentage of your income/wealth will be lower than someone in a middle band house/middle band income - that makes the overall effect regressive. The changes announced on Wednesday move the burden from 3 to 1 to 3.7 to 1 across the bands. Wightman calculates that in order to create an overall progressive system of CT, the variance from top to bottom would need to be 15 to 1.

Does that 15 to 1 figure account for or ignore the availability of council tax benefit?

[Baxter Parp]

If the councils could determine their own income tax surcharge it would just mean more tax codes, they wouldn't have to totally overhaul the IT systems. (imo)

It might seem simple enough but you'd have to get the software to consider your location as well as your income when determining your tax code which would be a fairly major consideration - they'd have to get the likes of capgemini or serco in and they're never cheap. They were going to charge Scotland millions for a simple +/- 3% five or six years ago, god knows what they'd charge for a local income tax.

[Baxter Parp]

That's an incredibly narrow definition of 'progressive' that doesn't take into account the overall systemic effects (and indeed, proportional value) of taxation on someone.

It is the definition of progressive taxation. It doesn't mean "liberal" or "fair". If you want to say it isn't fair then you might have a point but the Council Tax is a progressive tax.

You might pay more on a higher band house, but if your other assets, income etc are much larger still - then the overall tax burden as a percentage of your income/wealth will be lower than someone in a middle band house/middle band income - that makes the overall effect regressive. The changes announced on Wednesday move the burden from 3 to 1 to 3.7 to 1 across the bands. Wightman calculates that in order to create an overall progressive system of CT, the variance from top to bottom would need to be 15 to 1.

No one's saying it's radical, Nicola Sturgeon's called it "a start", which seems fair enough.

[renton]

Does that 15 to 1 figure account for or ignore the availability of council tax benefit?

Reading through it, my guess is not. It'd be interesting to see how much that ratio changes if the benefit is incorporated into the calculation.

[renton]

It is the definition of progressive taxation. It doesn't mean "liberal" or "fair". If you want to say it isn't fair then you might have a point but the Council Tax is a progressive tax.

No one's saying it's radical, Nicola Sturgeon's called it "a start", which seems fair enough.

No, it's a narrow definition and largely a useless one as well. The benchmark of progressive taxation must be based on the ability of the person to pay. That's what we are all talking about, that's the ball game. Only the overall systemic impact on the individual matters here. The problem CT has is that house prices went up, but not proportionally to the size of the house and income inequality exploded. The overall impact being that proportionally, middle income earners pay more of their assets out in CT than high earners do. It's about where the curves for house value, income and CT tax bands intersect, and now that means that CT is a regressive tax in our society. That doesn't mean it always would be - but currently it is, and the changes put forward this week only put a minor dent in that - but it is a change for the better.

Either a total re-evaluation of house values in line with a re-working of the bands or a change to a totally different tax base is needed to move us to a progressive system for levying tax. I don't doubt the stupidity of laying that on the electorate's lap in one go, and as I've said on more than one occasion, it's good politics. The headline on the BBC says higher earners pay more, that's all they want right now. If it is only a 'start' though, it'd be nice to see a more concrete path towards a different system, even if just a commitment in the future to a re-evalaution of the bands. For most people, the BBC headline is all they saw and good on them, but you can't blame the more radical parts of the SNP base and the other loosely allied Yes movements for feeling deflated.

It'll be interesting to see what commitments the SNP make on income tax, I'd expect a symbolic commitment to the 50p tax rate (which very few folk in scotland pay anyway) and thus being able to say they are puting more onus on high earners in both CT and income tax, which should get them over the line at the election.

[welshbairn]

http://localtaxcommission.scot/html-version-of-just-change-a-new-approach-to-local-taxation/05-can-a-local-tax-be-fair-and-equitable-for-everyone/