13 February 2009
By David Scott in Edinburgh
The Scottish Government has abandoned its controversial plans to introduce a local income tax during the current Parliament.
The surprise U-turn was announced by Finance Secretary John Swinney during a debate on the 2009/10 local government funding settlement in Holyrood on February 11.
Opposition parties attacked the decision as ‘the biggest retreat in the history of this Parliament’. It was also called a ‘gross betrayal’ of voters who had backed what was the Scottish National Party’s flagship manifesto commitment at the 2007 election.
Swinney blamed the abandonment on a funding cut of £500m to be imposed by Westminster next year and an inability to win enough support from the other parties.
He added: ‘We cannot put together a stable majority to enable us to steer detailed local income tax legislation through this Parliament.
‘The Cabinet has therefore decided not to introduce legislation to abolish the unfair council tax and replace it with a local income tax until after the election in 2011.’
But he pledged: ‘This government will fight that election to win a parliamentary majority that backs the abolition of the unfair council tax.’ Swinney gave a commitment that the council tax would remain frozen until the end of the Parliament in 2011/12.
One of the major problems faced by the minority Scottish Government is the potential loss of £400m in council tax benefit, a sum it believes should be transferred to Scotland even after the council tax is abolished.
Swinney also announced a 5.9% increase in local authority funding, giving councils £11.8bn. Councils were due to set 2009/10 council tax levels on February 12.
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