Local income tax doesn't add up, say experts

Published on Saturday 12 July 2008 19:43

THE Scottish Government's plans for a local income tax to replace council tax have been dealt a serious blow by the nation's accountants.

The Institute of Chartered Accountants of Scotland (ICAS) has claimed that the system would hurt business and create tensions between Scotland and England.

David Wood, executive director at ICAS, said: "At the moment, we do not see it as workable. We would be happy to talk to the Scottish Government to make it work."

The institute added that there were serious anomalies, such as what a person living in England but working in Scotland would have to do.

Employers' organisation CBI Scotland has claimed that the plans would cause extra costs. They have also claimed it would make it tougher for Scots firms to recruit employees from England, who could face higher tax.

London and Edinburgh have clashed over what would happen to the 400m of council tax benefit which Scotland receives from central UK coffers to help the worse-off pay council tax.

The SNP administration at Holyrood have argued that Scotland should still receive the cash to help with the costs of local income tax, while Whitehall has argued that if the council tax is no longer to be levied the benefit is no longer needed.