Labour brands local income tax 'last thing' struggling Scottish economy needs

Published on Friday 26 December 2008 18:16

THE Scottish Government faced fresh calls yesterday to ditch plans to introduce a local income tax.

Labour says the proposal, which would replace the council tax, is the "last thing" the country needs in the economic downturn.

The start up costs to employees for a nationally set tax were estimated at 55-60 million by the Burt committee on local government finance in 2006, according to Labour, with 18 million in annual costs.

"The estimate of what the Nat Tax will cost to set up is a frightening prospect for business," Labour's finance spokesman David Whitton said.

"The policy is ill-thought out and this kind of burden should not be placed on employers.

"In these challenging economic times, the introduction of LIT will make Scotland the highest taxed part of the UK, and it will discourage companies from wanting to do business in Scotland."

The Nationalist government has the support of the Lib Dems at Holyrood for the local income tax, but the SNP want it set centrally set at three pence in the pound, while the Lib Dems local say councils should be able to vary the rate.

But an aide to finance secretary John Swinney said: "No-one is taking Labour seriously on local government taxation, as they have no policy and no ideas of their own, apart from defending the discredited council tax.

"Along with their friends in the Tory Party, it seems Labour will defend the council tax to the end."

The aide added: "The reality of local income tax is that the proposal contains key advantages for Scottish business.