Broken Beyond Repair: Why now is the time to replace Council Tax

Now, with the Scottish Government and the Convention of Scottish Local Authorities (COSLA)  committed to hosting a public discussion about reform during 2025, there’s at least a chance for change. Whether this will be just the latest in a long line of hollow promises and reviews, or the start of something real, rests on political will before and immediately after the Scottish Election in May 2026.

But, for the first time in years, people will – it seems – be asked for their views followed by a Scottish Parliament debate on “proposed policy reforms”.

As a contribution to the debate, Oxfam Scotland has published a discussion paper – Broken Beyond Repair: Council Tax and the Case for a Fairer System to Tax Property Wealth.

As the paper outlines, we believe that tweaking the current system isn’t enough. Fairer local property and land taxes are vital to help combat Scotland’s deep wealth divides and to make sure councils can fund the services everyone relies on – particularly those on low incomes.

Scotland stands at a crossroads: will our political leaders seize this moment to build a fairer, modern local tax system that meets the needs of today’s communities?

The need for change couldn’t be clearer

A recent report from the Accounts Commission found that councils face a budget shortfall of £647 million this year alone with soaring costs and rising demand, including for social care. This is leading to mounting pressures on local services, from schools to libraries.

The Commission’s report warns that simply raising Council Tax and charges to plug the gap isn’t enough, and that relying on one-off savings or dipping into reserves can’t go on forever.

It’s therefore clearer than ever before that Councils need stable, fair funding to meet the needs of our communities, especially those with low-incomes and care needs.

What’s so wrong with Council Tax?

Council Tax is more than just outdated, it’s deeply unfair. It locks in inequality, favours the better off, and hits people on low incomes hardest. It’s just plain wrong that a nurse or teacher can quite easily pay more Council Tax than a millionaire.

The gap between Scotland’s richest and poorest households is staggering: the wealthiest have 217 times more wealth than the poorest, while nearly one in five Scots live in poverty. A big part of this extreme wealth inequality comes down to property ownership and how we tax it.

Here are just a few of the main problems with Council Tax:

• Disconnected rates: The most expensive homes only pay at most 3.5 times more than the cheapest, despite being on average at least 15 times as expensive.
• Outdated values: Council Tax is based on property prices from over 30 years ago. Since then, house prices have risen dramatically and at widely different rates across the country, meaning more than half of homes pay the wrong amount.
• Unbalanced contributions: Three-quarters of homes are in the lowest bands, but a third of the richest people in Scotland live in these homes too, meaning many of the wealthiest people pay some of the smallest bills. At the same time, many low-income households, especially women and single parents, live in homes in the highest bands so end up paying some of the highest bills.

Why small changes aren’t enough

The Scottish Government has previously suggested small changes to Council Tax, like raising rates for the most expensive homes. But these tweaks won’t fix the root problems. Even a nationwide revaluation, while essential, wouldn’t solve the fundamental unfairness if the system itself stays the same. What’s really needed is bold reform.

Oxfam Scotland believes a modern, nationwide revaluation of all homes must be launched in parallel with the development of a fairer system, like one based on a percentage of what your home is actually worth today, called a proportional property tax.

This would:

• Ensure those with the most contribute more: The wealthiest households, who own the most expensive homes, would pay a fairer share.
• Lower bills for many: Many lower-income households would see their bills go down.
• Provide better funding for local services: Councils could raise more money in a fairer way to fund vital services like social care, libraries, and public transport.

A fairer property tax must also be designed to make sure people on low-incomes who genuinely can’t afford higher bills, including some pensioners and tenants, are protected.

We also believe councils should have more than one way to raise money locally, while ensuring local taxes also encourage more businesses to pay fair wages, boost support for those with caring responsibilities, and contribute to tackling climate change.

What needs to happen next?

Ahead of the Scottish Parliament election in May 2026, we’re urging Scotland’s political parties to set out clear plans for real reform. They must not only make firm commitments to urgently revalue properties, but also to replace Council Tax, not just tweak the current system.

But any changes must protect people who need help most, making sure that people on low incomes – like pensioners, tenants and single parents – aren’t left worse off.

The longer we wait, the more unfairness is locked in. After years of talk and broken promises, Scotland must take this chance to build a better, fairer local tax system.

There are plenty of good ideas. What’s been missing is the courage to act. All political parties must leave platitudes and promises behind, and set out clear, time-bound plans.

Want to know more?

If you’re interested in the evidence and the details, read Oxfam Scotland’s discussion paper, Broken Beyond Repair: Council Tax and the Case for a Fairer System to Tax Property Wealth.