Thinking bigger on tax in Scotland: Using Scotland's local tax powers to their full potential
In recent years the Scottish parliament has seen the devolution of significant new powers over taxation. In many ways the policy debate has been dominated over how these new powers, particularly over income tax, should and could be used. However, the focus on Scotland’s new powers has dominated to the exclusion of how pre-existing powers could potentially be helpfully employed in this new context.
This thought paper outlines the existing local government funding context, including recent cuts to local government funding in Scotland, and current funding arrangements, including that Scottish government grants account for over half of local government income. It also considers some of the ongoing reforms to local taxation, including through the forthcoming tourist tax and workplace parking levy.
The paper then looks at a number of international examples of sub-state taxes, before considering which of these international examples could be applicable in Scotland.
The paper considers five illustrative examples of potential new forms of local tax and local funding arrangements in Scotland.