If you want to bid Government up, don’t start by bidding yourself down
As well-meaning as the Greens’ proposals for property tax reform were, they were doomed by dint of their own self-sabotage by minimisation.
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The Scottish Greens suffered two defeats in Parliament this week as they attempted to table amendments to the ongoing Housing Bill. Both of these amendments would have, if passed, led to positive changes to the Scottish housing landscape and to wealth inequality in Scotland but only in the sense that the current landscape is so bad that almost any change would have been positive. That they were voted down provides an object lesson in how not to make positive change that is worth spelling out because I’ve seen the same thing happen too often from too many people in politics from Government Ministers through to lobbying groups.
The first of the amendments was a minor reform to Council Tax. Unlike our proposal – which would see Council Tax entirely scrapped and replaced with a Property Tax based on a percentage of the present value of the house – this would have maintained the current Council Tax system by would have only changed the baseline for the valuation of the house from what it was worth in 1991 to what it is worth today. This might sound similar to our proposal but there is a substantial difference. Under the current Council Tax if I live in a Band A house valued at £25,000 in 1991 and you live in a Band H house valued at £250,000 in 1991 you will only pay around 3.5 times as much Council Tax as I do despite your house being worth ten times as much. If we update the valuations to 2025 and my house is now valued at £70,000 but is still in Band A and yours is still Band H but now worth £700,000 then you still only pay 3.5 times as much Council Tax as I do. Under our scheme you would pay (at least) ten times as much tax because the tax would be based on the actual, not the banded, value of the house.
There are advantages to revaluation. House prices haven’t changed evenly in all places. Many houses in Scotland (perhaps the majority of houses) are in the “wrong band”. I’ve seen houses on the market this year valued at £30,000 and at £300,000 where both of them were in Council Tax Band D and would pay the SAME amount of Council Tax despite their value. This is why I describe fixing this as an absolute positive thing.
However, think about the actual implementation of this revaluation. We need a nationwide valuation of all houses or, at least, a ‘Zoopla-style’ algorithmic estimation of valuation and then a system of negotiating and arbitrating with people who want to dispute their “new” band. You also need to repeat the exercise regularly because while it’s possible to update a house valuation when it’s sold, inherited or transferred this is quite a slow process (the average time between ownership transfers of a given house in Scotland is roughly once every 20 years). It’s a not insubstantial effort, though it is possible (Wales has done it a couple of times this century).
But compare that to the effort required to bring in a Property Tax. It’s about the same. We still need that exact same valuation and the same system of arbitration to catch houses that don’t sell between them (Denmark went through their latest iteration of that scheme last year) but you end up with a tax scheme that is far superior for the same effort.
The second amendment was for a “mansion tax”, an additional band added to Land and Buildings Transaction Tax that would added a 15% tax onto the value of a property over £1 million (currently the highest band is 12% on the value of houses over £750,000). This would have been a positive step towards improving wealth inequality and increasing the share of tax revenue contributed according to the means of the very richest but it wouldn’t have had much impact all in. Fewer than 400 £1mn+ mansions were sold in Scotland last year (0.3% of total house sales) and I can’t see reliable data on how much over £1 million they would have sold for but that does suggest that the tax revenue would have been minimal (a £2 million mansion would only pay £30,000 more under the Green proposal than under the current scheme), the tax wouldn’t have particularly affected those sales or brought down house prices (if you can afford a mansion, you can afford the tax) and, crucially, it won’t affect you at all if you don’t buy a mansion – if you already own one or three but don’t plan to buy any more, then you won’t pay the tax.
But the Parliamentary Committee wasn’t asked to bring in a Property Tax (at least, not by the Greens at this Committee despite our lobbying of every MSP in Parliament to do so). They were asked to revalue Council Tax. If the pitch was “we’re not confident enough to take a radical action, so here’s a much less radical one that takes the same amount of effort and only barely softens but doesn’t actually fix the problem”...would you vote for it? Similarly with the mansion tax – just the mere suggestion of it sends the right wing press the Government pays too much attention to into a frothing frenzy so many politicians (even the ones without the aspirations to buy mansions themselvse) would have looked at the projected revenue figures and asked if it was worth the effort. There’s less excuse to block this amendment than there was the Council Tax one, but I can see why it was blocked.
This was the lesson we tried to get across to campaign groups like Tax Justice Scotland who had been promoting the same policy. When lobbying politicians you will occasionally have to make compromises or you may see your policy watered down as it moves through the grinding gears of the legislator (we’ve certainly seen that happen with policies we’ve managed to win in Scotland such as the Lobbying Register, Scottish National Investment Bank or policies around public energy) but here’s the thing – never bid yourself down beforehand. Always argue for the maximal, radical and most beneficial version of the policy that you want to see. Let it be for others to water you down and let it be for you to resists those efforts.
There’s a principle I’ve noticed in politicians over the years that I’ve dubbed the “Minimum Promised Deliverable” – the principle of doing the absolute least thing that still allows a politician to stand at a podium and say ‘See that thing I said? I’ve done this.’ If the promise was to ‘intend to...substantially eliminate [the attainment gap] within a decade’ then the MPD is to have no impact on the attainment gap because the promise wasn’t to close it, but merely to intend to.
This is the policy gap you’re really dealing with when lobbying Parliament. As much as you think a policy can be watered down in order to make it palatable, they can always dilute things even more. In fact, as we found out with our “successful” campaign for a Scottish Public Energy Company, the MPD can sometimes be for Government to very loudly do absolutely nothing at all.
And this is the lesson when dealing with Government. There is a time for compromise and haggling but it is not at the start of the policy process. If you want to bid Government up, don’t start by bidding yourself down. I hope the next time someone brings forward the long-overdue issue of Council Tax reform, this lesson is remembered. Maybe next time, it’ll help us actually get the reforms we need.
