Swinney: Most people back local income tax proposal

Published on Monday 24 November 2008 16:12

THE Scottish Government today claimed popular backing for its planned local income tax, saying that most Scots thought it fair.

Out of 430 people who responded to its consultation paper on a 3p local income tax, 55% thought it was the fairest form of taxation.

The consultation also attracted responses from 86 organisations.

One of these, the Confederation of British Industry launched a fresh onslaught on the plan when the Scottish Government today published its analysis of the consultation exercise.

CBI Scotland assistant director David Lonsdale said: "Our members remain wholly opposed to a local income tax as it would mean a costly extra administrative burden for firms operating in Scotland, particularly in those sectors which traditionally have a high staff turnover such as tourism, hospitality and retail."

And Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "It is extremely disappointing that the Government is planning to press ahead with legislation to introduce a local income tax in Scotland without addressing the widespread concerns among the business community regarding such a measure."

The Tories claimed today's publication had been delayed.

Tory finance spokesman Derek Brownlee said: "The more detail on local income tax people see, the less they like it.

"Real questions have been raised by groups across Scotland that we need answers to.

"It's not clear if Alex Salmond thinks that today is a good day to bury bad news or if he feels the need to compete with Gordon Brown with his very own tax con."

The Scottish Government analysis of the consultation found that 55% of responses from individuals saw local income tax as the fairest approach while 25% favoured the council tax.

Most organisations studied the merits or drawbacks of each form of taxation but of the 16 which gave direct responses, 10 favoured a local income tax and five supported the council tax.

When asked if a local income tax will have a positive economic benefit for Scotland, there was an even split among individuals – 44% said yes and 42% said no.

But the idea of paying more in income tax for better public services found little favour – 59% of individuals said they would not pay more than 3p.

Both individuals and organisations said money raised through income tax should be distributed to councils on the basis of need, rather than other criteria, such as population.

Finance secretary John Swinney said: "The council tax has to go.

"The Scottish Parliament agrees and now this is welcome evidence that Scots up and down the country agree."

He said a 3p local income tax will be "the biggest tax cut in a generation" and would put money in people's pockets.

"I am pleased that the majority of respondents to the consultation agree that a local income tax, based on ability to pay, is a fair tax," said Mr Swinney.

"The Scottish Parliament has twice agreed that council tax is now discredited, and there is now a clear momentum behind our plans.

"We will publish a Bill to abolish council tax in this Parliamentary year.

"We are currently analysing a further number of issues, including the position of full time students, second homes, possibly applying the tax to dividend income and options for local variability of the tax rate in a downward direction."

Ministers will press ahead with legislation for the new tax despite a question mark over the 400 million allocated for council tax benefit by the Treasury.

Westminster said the benefits will go if council tax is scrapped but the Scottish Government argues that the money should stay in Scotland.

A Scottish Government spokesman said: ""We've said we'll press on with our proposals to abolish the council tax and bring forward a local income tax in a Bill which will be brought to the Scottish Parliament in the current parliamentary year."

Liberal Democrats, who support a local income tax but say the SNP's plan is flawed, claimed there were recent indications the Scottish Government was acknowledging their concerns.

Finance spokesman Jeremy Purvis said: "Many of the respondents to this consultation agreed with the Liberal Democrats that students and pensioners should be protected.

"Many also agreed that unearned income, such as significant interest on dividends, should also be subject to new local taxation."

He said: "A local income tax that is genuinely local would be fairer.

"It would, contrary to what the Labour Party claims, put more money back into people's pockets. This would have a direct and positive impact on our economy."