Local councils could be allowed to keep a slice of the income tax raised in their areas under radical plans unveiled by Nicola Sturgeon last night.
The First Minister believes the move could boost growth and says it will form part of the SNP’s proposed replacement of the council tax.
The move was welcomed by local government chiefs but has previously prompted concerns of a “postcode lottery” across Scotland as areas of high employment win at the expense of jobless blackspots.
The Scottish Government will announce detailed plans on local taxation next week after all the main parties in Scotland accepted the findings of a recent Commission which said the council tax is finished.
Ms Sturgeon said: “The changes to council tax that we will propose are part of a longer-term plan. In particular, we will discuss with local authorities how we can assign a share of income tax revenue to their funding.
“That means that if councils succeed in boosting economic growth, and consequently income tax receipts, they will share in the benefit. And it also means that local government funding will be more broadly based. Income tax, and a more progressive council tax, will both play an important part.”