Local income tax 'would be illegal'

Published on Monday 26 May 2008 22:17

THE Scottish Government's plan for a local income tax has been dealt another blow after an expert said it would break European and UK law.

Professor Chris Himsworth told MSPs that a European treaty ratified by Westminster could kill off the idea of replacing the council tax with a fixed local income tax of 3p in the pound.

The Edinburgh University law professor believes the move would be in breach of the Council of Europe treaty known as the European Charter of Local Self-government.

In his submission to Holyrood's local government committee, Prof Himsworth said the charter was legally binding because it had been ratified at Westminster. He pointed out that articles 7 and 9 enshrined the right of councils to vary their own levies, and that this would be removed in the Scottish Government's proposal for a fixed income tax charge.

"It seems to me that a proposal to remove from Scottish local authorities any power at all to determine the level of their own financial resources through local taxation is almost certainly in breach of Article 9," he said.

David McLetchie, the Scottish Tories' local government spokesman and a member of the committee, said: "I would be very surprised if the Scottish Govern-ment had looked into the potential effect of this charter, given how flaky their background work seems to have been for this proposal."

But a spokesman for the Scottish Government said ministers were looking at the legal issues as part of their consultation.

"We are currently consulting on our proposals and are asking if councils could be given the power to set any rate of local income tax they choose, whether they could have the power to vary the rate within a defined range or whether to set a single national rate of 3p in the pound," he said.

"We will bring forward proposals to abolish the council tax and replace it with a local income tax that will be within devolved competence."

Prof Himsworth will give further evidence to the committee tomorrow, along with two other experts, Professor Richard Kerley, of Queen Margaret University in Edinburgh, and Professor Alan Page, of Dundee University.

The committee is looking at the legal competence of the local income tax proposal to feed into the Scottish Government's consultation process.

BACKGROUND

THIS is not the first time the legality of the SNP's proposals for a fixed 3p local income tax to replace the council tax have been questioned.

Professor Richard Kerley, a local government expert from Queen Margaret University, the UK government and David McLetchie, the Conservative local government spokesman, have all raised legal problems. They have argued the Scotland Act may make the SNP's fixed rate local income tax unconstitutional because it would be a national tax.

The Treasury added another difficulty by saying it will withhold 400 million of council tax benefit if the council tax is abolished in Scotland.