Scrap council tax for local VAT, says MSP

Writing in The Scotsman, the independent MSP enters the debate over council tax by calling for a radical alternative.

Mr Monteith says he wants to see a sales tax introduced to place the burden on those with income who spend the most, and create a competitive environment between councils.

The Mid Scotland and Fife MSP quit the Tory group last year after it emerged he had privately called for the resignation of David McLetchie, the former leader.

He has always been on the radical right of the Scottish Tory Party, but today he has published the first real example of new thinking since he left the Conservative group.

The council tax was introduced by a Conservative government and is still backed by the Scottish party.

But it has become a major political issue as increases in bills outstrip inflation, and has become a point of conflict between councils and the Executive.

Mr Monteith says: "A study by the Institute of Fiscal Studies has shown that, were the 20 per cent of local authority spending funded by council tax to be raised through an increase in VAT, it would require an increase of about 5 per cent. Change the responsibilities of local authorities - such as the delivery of education, or police - and the amount of local tax could be even smaller.

"Now take that 5 per cent and add it to the goods and services you buy - recognising that the necessities of life such as food and clothing are not taxed - then one begins to see that people on fixed incomes could make savings, while those consuming more, together with tourists who make no local contribution to taxes, would be paying more.

"When considered this way, a sales tax becomes more attractive - certainly more so than the regressive council tax.

"One result of a sales tax system would be tax competition. But I see this as a good thing, as the imperative is to keep taxes down."