The Scottish Government has launched a consultation on plans to create two new council tax bands for homes valued at more than £1 million and £2 million, with the additional revenue earmarked to help fund local public services.

Under the proposals, properties worth more than £1 million would pay an extra £720 a year, while homes valued above £2 million would face an additional £3,600. The changes would affect fewer than 1% of Scottish properties but could increase annual council tax bills for the highest-value homes to almost £7,650.

Consultation documents estimate the new bands would generate between £12 million and £16 million annually across Scotland, with all additional revenue retained by local authorities.

Deputy First Minister and Finance Secretary Jenny Gilruth said the plans were designed to make the tax system fairer by asking those with the highest-value properties to contribute more.

She argued that some multi-million-pound homes currently face council tax bills that differ little from those paid by households in much lower-value properties. Gilruth said the additional income would help councils fund local services, while supporting the Scottish Government’s wider investment in public services and cost-of-living measures.

Lorna Slater of the Scottish Greens welcomed the consultation, describing it as a significant step towards raising extra funding for schools, libraries and other local services while helping to tackle Scotland’s housing challenges.

The proposals have also attracted criticism. Opponents such as the Scottish Conservatives argue the additional bands would raise relatively modest sums compared with overall public spending and have questioned whether they could discourage investment in Scotland’s housing market or place additional pressure on some homeowners with valuable properties but limited incomes.