Labour property tax plan attacked

20 Aug 09
Political opponents have attacked the Scottish Labour party’s plans for a new property tax based on the capital value of individual homes
By David Scott in Edinburgh

20 August 2009

Political opponents have attacked the Scottish Labour party’s plans for a new property tax based on the capital value of individual homes.

The Scottish Tories accused Labour of trying to replace the council tax with a tax on home improvement, while the Scottish National Party claimed Labour’s ‘property poll tax’ would result in enormous bills for families and pensioners.

The latest row over the future method of council financing flared after it emerged that a Scottish Labour taxation working group, led by opposition finance spokesman Andy Kerr, is considering a property tax using capital values instead of council tax bands. There would be regular property revaluations, which would take account of home improvements.

A senior Labour source told Public Finance that the group wanted to come forward with a tax that was ‘fair, reasonable and workable’.

The source confirmed that the group was developing a new property tax but stressed that there was a long way to go before final proposals were drawn up. 

But the disclosure reignited controversy about local taxation, which has been off the political agenda since the SNP shelved its plan for a local income tax earlier this year.

Scottish Tory finance spokesman Derek Brownlee said: ‘Not content with ruining Britain’s economy, they [Labour] now want to penalise those who work the hardest and improve their homes.’

Brian Adam, SNP chief whip, said pensioners and homeowners across Scotland would be ‘horrified’.  He added: ‘If these plans were to be implemented we would see pensioners facing enormous bills.’

The row has been fuelled by Labour’s decision to consider, among other options, the property tax proposal recommended three years ago by a committee of inquiry headed by Sir Peter Burt. This was rejected by the party when it was in power at Holyrood. 

Scottish Labour leader Iain Gray has told the Convention of Scottish Local Authorities that, ‘as a first principle, it should be a property tax’. He pointed out that 37 of the 39 countries in Europe have some form of property tax.

The Labour source accused the other parties of ‘scaremongering’ and said it was ‘total nonsense’ to suggest that the party intended to penalise homeowners.

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