Highland Council considering annual council tax hikes of 5–7% to invest in infrastructure and tackle its dealing deficit
Council tax rises of between five and seven per cent are on the table at Highland Council as it aims to deal with a massive deficit and invest in infrastructure.
An update to the local authority’s medium term financial plan running from 2025-2028 shows the council is budgeting for at least a five per cent hike in council tax each financial year.
That is the equivalent of 15 per cent over three years but the impact would be significant on householders as the increases would be progressively larger.
Council tax did not change last year as the Scottish Government provided additional cash to local authorities after then First Minister Humza Yousaf called for a freeze.
But that comes amid a series of significant tax rises in recent years, starting with a three per cent rise in 2022 and a four per cent rise in 2023.
The local authority moved to a three-year budgeting model in a bid for more financial stability but must still set budgets annually so tax projections are available now.
Right now the council is looking at a five per cent increase year-on-year equating to £160 million total income from council tax in 2025/26, then £169 million (2026/27), and £179 million (2027/28).
The £2 billion Highland Investment Plan could also trigger an additional tax rise because to get the loans needed to fund the proposals a sum of £2.8 million is needed.
That would mean either a two per cent rise in council tax – on top of the already budgeted five per cent – or the equivalent sum would need to be found elsewhere.
According to papers to be discussed at next week’s full council meeting, the move has already been agreed that council tax may be used to fund the investment plan.
The report stated: “The financially modelled assumption was for a sum equivalent to two per cent per annum of council tax to support the capital objectives of the HIP.
“This would in turn release £2.8 million per annum on a growing profile, to support borrowing costs and capital investment.
“The Medium Term Financial Plan and revenue budget decisions will therefore need to factor in either an additional two per cent of council tax income, beyond current assumptions, or a sum equivalent (i.e. met from savings or other additional measures) to support the Highland Investment Plan.”
