SNP's local income tax could be 6p in the pound, say experts

Published on Thursday 26 June 2008 22:34

SCOTTISH taxpayers would have to pay up to 6p in the pound to balance council books if the SNP's local income tax is introduced, according to new research released yesterday.

The Scottish Government wants to impose a centrally set local income tax to replace the council tax. But a study carried out for Glasgow City Council has revealed every council in Scotland would need more than a 3p rise in income tax to balance their books.

The revelation came as members of the Convention of Scottish Local Authorities (Cosla) prepare to meet today in Aberdeen to decide whether they will back local income tax.

Convention leaders are expected to at least demand councils are given the right to set rates locally. There will also be an attempt to get Cosla to call for the whole proposal to be ditched, although this may be blocked by SNP members.

To add to the Scottish Government's discomfort, South Lanarkshire Council has also submitted its objections to the proposal. Like Glasgow City Council, it opposes control being taken away on setting the level of local taxation.

It has requested the proposal is dropped on the basis of "accountability, fairness, stability and predictability".

The local authority objectors join CBI Scotland, the Federation of Small Businesses, Unison and a range of economists and academics in opposing the flagship SNP policy.

The Glasgow study found only Shetland would come close to balancing its books, needing a 3.1p increase in income tax for its residents, but Western Isles would need 6.1p and 28 of the councils would need a rate of more than 4p. The average across Scotland would be 4.4p.

The study added that there would be a shortfall per household of between 35 and 466. On average, 300 would be lost per household in the country.

Stephen Curran, Glasgow City Council's treasurer, said the figures confirmed that every council across Scotland faced a shortfall in funding with a nationally set 3p rate for local income tax.

He added: "The shortfall is the equivalent of 300 for every home receiving a council tax bill across Scotland.

"We are already forecasting a need to make efficiency savings of 50 million over the next two years in Glasgow to account for rising costs along with police and fire pension contributions. If the 3p rate applied, we would need to find an extra 120 million to make up the shortfall for two years."

Last night, the Scottish Government attacked Labour-led Glasgow City Council for using taxpayers' money to allegedly fund a political campaign against an SNP policy.

A spokesman for Alex Salmond, the First Minister, said: "I think people will be surprised that Glasgow is wasting money on an exercise like this, especially looking at areas outside its responsibility."

But he added: "I think, though, we have to thank Glasgow City Council for actually making our case for us, even if it was inadvertent.

"The figures prove without a doubt that what the SNP is proposing is a major tax decrease. Their submission to the consultation also showed that it would benefit 70 per cent of its own residents.

"Let us be clear that the local income tax will be 3p, not any more or less.

"This equates to a 281 million tax cut for people in Scotland, which everybody should welcome."