Ministers urged to dump local income tax

Published on Thursday 17 July 2008 22:11

THE proposed local income tax has met with almost universal opposition from organisations across the country, and the Scottish Government should abandon it, Labour said yesterday.

The demand from Iain Gray, the party's finance spokesman, came the day before consultation on the plan to replace the council tax with a centrally-set 3p local income tax (LIT) draws to a close.

But SNP ministers are still adamant their proposal, which they say would cut local taxation by 281 million, is popular, and they hope a deal with the Liberal Democrats may see the policy come to fruition.

In a surprise victory for the two parties, they managed to secure a vote supporting the principle of LIT, although not the SNP's specific proposal, at a meeting of the Convention of Scottish Local Authorities.

However, lined up against the tax plan are the Institute of Directors; Unison, the UK's biggest public sector union; the Scottish Trades Union Congress; the Chartered Institute of Public Finance and Accountancy; CBI Scotland; the Federation of Small Businesses; the Policy Institute; Glasgow City Council; the National Union of Students; Edinburgh Chamber of Commerce; and the Institute of Chartered Accountants.

Among their complaints about LIT are that it would mean extra bureaucracy, would drive away business and investment, and the fact it would be a central, not local, tax. Experts have also questioned its legality under EU law and the Scotland Act.

Mr Gray said: "If the word consultation means anything at all, Alex Salmond should listen to what he is being told and dump this unpopular plan to make Scotland the highest-taxed part of the UK."

But a spokesman for Mr Salmond said Labour should be ashamed for supporting the council tax, which "penalises pensioners and some of the poorest people in our society".

He added: "Labour MSPs would pay 600 more if we introduce a LIT, while four out of five households in Scotland will be better or no worse off.

"Polls show the Scottish Government's proposals for a local income tax enjoy overwhelming support, with voters from all the four main parties favouring a LIT over the council tax."

&#149 To make your views known, go to "A Fairer Local Tax for Scotland" on page two of the consultations section of the website www.scotland.gov.uk