Council tax in Scotland is set to be revamped with the most expensive households paying up to £500 more.
Under the new system, council tax bands E, F, G and H will be subject to higher payments, while bands A to D will be unaffected.
The proposals, which spells the end of the council tax freeze, will see the average band E household paying around £100 extra each year, with the highest band, H, contributing an extra £500.
In total it is estimated the increase in payments, based on the recommendations of the Commission on Local Tax Reform, will generate £100m in additional revenue.
Last year, the cross-party Commission called for an end to the council tax and urged politicians to implement a fairer, more progressive and transparent tax to fund local services, although it failed to offer an alternative system.
First Minister Nicola Sturgeon unveiled the plans during a visit to Lasswade High School Centre in Bonnyrigg, Midolthian, revealing that extra monies raised from the reforms would be invested in schools.
The SNP’s flagship council tax freeze, widely condemned for putting an increasing financial strain on local authorities, will remain in place until April 2017, it was announced.
Local authorities will be given the discretion, however, to increase council tax by a maximum of 3% per year.
This could generate up to £70m for council services across the country, it has been estimated.
An additional 54,000 households living in bands E to H currently living on low incomes – a third of which are pensioners households – will be entitled to an exemption from the scheme.
The reforms will also provide additional support to families on low incomes across all council tax bands by extending the relief available to households with children.
This will benefit 77,000 low income families by an average of £173 per year, supporting an estimated 140,000 children.
Speaking of the proposed reforms, First Minister Nicola Sturgeon said:
“Over the past eight years, our council tax freeze has helped households across the country, keeping bills affordable during difficult economic times.
“However, the Commission on Local Tax Reform made clear that the present system could be made fairer. We are choosing to do this in a reasonable and balanced way that will also generate £100 million of additional revenue to invest in schools.
“These reforms to council tax bands will mean no change for three out of every four Scottish households, with those in lower banded properties paying no more than they do now.
“Households will also still, on average, pay less than those on equivalent bands in England and less than they would be paying had the council tax freeze not been in place.
“Overall, these proposals will protect household incomes, support investment in our schools, make local taxation fairer and ensure local authorities continue to be properly funded while becoming more accountable.”
The Scottish Trade Union Congress released a statement criticising the changes for not going far enough, expressing their dissatisfaction that council tax bands hadn’t been scrapped altogether:
“The STUC welcomes the First Minister’s commitment to ending the Council Tax freeze next year and to introducing some additional progressivity to the system.
“However, in totality, the measures announced by the First Minister today are very disappointing. With over half of all homes in the wrong band it is scarcely credible that reforms will not be accompanied by a revaluation and, at the very least, the introduction of new, higher bands was surely a prerequisite for persisting with the Council Tax.
“These weak reforms could have been implemented under existing powers years ago. The capping of Council Tax increases at 3% and the hypothecation of revenues does little to further the cause of local democracy.”