A blunt instrument

At a meeting of Shetland Islands Council in January 2026, councillors from across the chamber described council tax as a “blunt instrument” for raising local revenue, and one that many agreed should have been reformed years ago.

The discussion reflected a shared frustration. Council tax is based on property valuations from 1991, takes limited account of ability to pay, and yet remains one of the few fiscal levers available to local authorities. Despite its shortcomings, it is repeatedly returned to because there are few practical alternatives within the current system.

Council tax currently raises around £12.6 million per year in Shetland. That figure is often presented as significant — and for individual households, increases are certainly felt. But in the context of Shetland’s overall financial position, it represents only a small part of the picture.

As set out elsewhere on this site, official economic figures published by Shetland Islands Council indicate that, once all direct and indirect taxes have been accounted for and all grants and public spending required to run Shetland have been returned, a far larger sum remains in the UK Treasury each year. When those figures are expressed on a consistent basis, the implied Exchequer Balance is approximately £139.7 million per year.

This comparison is not made to dismiss council tax concerns. For households, council tax is the most visible and immediate pressure. But it does help explain why repeated increases to a “blunt instrument” can feel both painful and insufficient at the same time.

For readers who want to understand how these larger figures are calculated, and why they matter at household level, the methodology and sources are explained in the Finance overview.