Green Party Tax Proposals

Sunday April 3rd 2016

Scottish Greens proposals for funding public services, replaces the Council Tax with a property tax, and uses new devolved powers to cut income tax for lower earners while higher earners pay more.

The Greens’ proposals follow recommendations from poverty advisors, Scottish Government tax experts, the OECD and the cross-party Commission on Local Tax Reform. The proposals put more control in local hands and take a significant step towards the Scottish Greens’ long-standing policy of a land value tax.

Progressive Income Tax

Under the Greens’ plans for Income Tax, everyone earning less than £26,500 a year would get to keep more of their pay, while those who earn more would be expected to contribute more.

To help put this into context a teacher who has completed their probationary period will earn at least £26,628. (Source

The current Basic Rate of 20% would be replaced by two bands – 18% for the first £7,500 of income above the personal allowance and 22% for income above £19,000. The net effect of these two bands would mean that everyone earning below the national average would be better off. Income above £43,000 would be taxed at 43%, and income above £150,000 would be taxed at 60%.

Switching to this system they say would raise, at the very least, an additional £331million to invest in public services, compared to the SNP’s proposals for income tax. This figure does not include assumptions about the level of additional revenue from increasing the top rate of tax from 45 to 60 per cent. Using the internationally-recognised Gini ratio, the Greens say their plan reduces inequality four times more than the SNP’s.

Someone earning the median salary in full time work – £27,710 – could expect to pay just £24 a year more in income tax.

An MSP, earning £60,685, could expect to pay £938 a year more.

Patrick Harvie, Finance and Economy spokesperson for the Scottish Greens and MSP candidate for Glasgow, said:

“Public services such as schools and social care and community facilities have been hit hard by cuts from the SNP government on top of 8 years of a regressive council tax freeze. Despite arguing for control over income tax, the SNP have failed to seize the opportunity to create a more progressive system to tackle inequality. There is an urgent need and the Scottish Greens are responding to it.

“People on generous salaries, such as MSPs, deserve to pay a fairer share to protect and improve the public services we all rely on. Someone earning less than the average and struggling with the cost of living deserves to keep more of what they earn.

“Scottish Greens believe Scotland can be a fairer country but we need a bolder Holyrood with more Green voices to press the case. With the SNP’s reluctance to act and Labour’s limited offering, our income tax proposals will find favour with those who see the chance to create a more equal Scotland.”

Residential Property Tax

Under the Greens’ plans to abolish the Council Tax, a replacement Residential Property Tax (RPT) for individual properties would be based on annually updated values, as has been implemented in Denmark.

By contrast, Council Tax bands are based on valuations a quarter of a century old, and the Commission on Local Tax Reform estimated that more than half of all properties are currently in the wrong Council Tax band.

The Greens propose a five-year transition period and options to reduce or defer payment depending on circumstances.

A Residential Property Tax rate of around 0.7 per cent would raise the same amount as the current council tax. A rate of 1 per cent across Scotland would raise an additional £490million for local services. It would mean a property valued at £150,000 would be liable for RPT of £1,500 but with a £10,000 tax-free allowance the owners would only pay £1,400.

Valuations would be itemised, showing the value of the land on which the property sits, and the value of the building itself. Such a system operates in other European countries, such as Denmark.

This they say would then allow councils, over time, to vary the percentage of each element, so a local authority could weight the bill 100 per cent towards the land value, creating a land value tax.

Andy Wightman, Local Government spokesperson for the Scottish Greens and MSP candidate for Lothian, said:

“Property owners and tenants are being left in a ridiculous situation by the SNP with a tax based on values from quarter of a century ago. Most people are paying the wrong amount. A wide variety of experts in this field have shown how a property tax can be made proportionate and progressive, and that is what the Scottish Greens are proposing.

“We see the replacing of the council tax with a residential property tax over a five-year period as a sensible approach. The modest tweaks to the council tax proposed by the SNP and Labour demonstrate the need for a bolder Holyrood with more Green voices. Our proposal to give local authorities the flexibility to raise revenue in a fair way means they can start to reverse cuts to local services, and take back control from central government. By implementing a property tax with a land value element, we can make strides towards a land value tax that will help make homes more affordable for all.

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