Scots LibDems outline local income tax plans

12 Apr 07
The future of local government finance moved up the election agenda in Scotland this week as the Liberal Democrats announced their plans for a local income tax.

13 April 2007

The future of local government finance moved up the election agenda in Scotland this week as the Liberal Democrats announced their plans for a local income tax.

According to the party, which shared power with Labour in the outgoing Holyrood administration, the average tax rate would be 3.625%.

The calculation is based on financial modelling carried out by the Burt review committee and updated by recent work by the Institute for Fiscal Studies.

The Scottish LibDems said the rate would be set locally within a range of 3.5%–3.75%. This compares with the Scottish National Party's local income tax proposals which would set a national level of 3%.

LibDem finance spokesman George Lyon stressed that his party's proposals were fair, fully costed and would benefit 70% of households.

Based on the ability to pay, the average family would be £439 better off, and half a million pensioners would pay nothing, he claimed. Young people starting in careers or setting up a business would also benefit.

Lyon added: 'Labour's [council tax] rebanding proposal would result in over half of households paying more.'

If the council tax were retained, there would need to be a revaluation similar to that carried out in Wales where it resulted in an average 10% hike, Lyon said.

SNP finance spokesman John Swinney described the LibDem proposals as a 'second-best' policy. He added: 'The SNP's local income tax represents the biggest tax cut for middle Scotland and pensioners in a generation.'

First Minister Jack McConnell, launching the Labour manifesto on April 10, confirmed the party's intention to retain the council tax, saying it was committed to making the system 'more stable, fair and proportionate'.

The manifesto, Building Scotland, pledged to help pensioners by reducing their water charges, initially by 50% within a two-year period. In Scotland, water charges are included in council tax bills.

The manifesto, which focused on education, added: 'We are firmly opposed to any form of local income tax.'

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