25 April 2008
The minority Scottish National Party government is facing further problems over its controversial plans for a local income tax after being forced to include alternatives in its consultation.
On April 17, the Scottish Parliament backed a Green Party amendment that called for a wider range of options to be considered, including a land value tax. The decision follows a series of setbacks for Finance Secretary John Swinney, who wants to press ahead with his plans for a nationally set LIT of 3p in the pound.
As exclusively disclosed in Public Finance on April 4, the UK Treasury is insisting that the Scottish government has no power under the devolved settlement to levy a nationally set LIT.
It has also said that ministers would not be able to retain the £400m currently paid in council tax benefits, which has been included in the SNP costings.
There has also been a series of potentially damaging claims by opposition parties, which produced figures suggesting that hundreds of thousands of students and low-paid workers would be penalised as a result of the LIT.
During the debate, Labour's local government spokesman Andy Kerr said it could turn out to be First Minister Alex Salmond's 'poll tax'.
However, Labour and the Conservatives failed in their attempt to persuade MSPs to reject the LIT. Instead, the Greens, backed by the SNP and Liberal Democrats, won the Parliament's support, by 65 votes to 61, for more consultation on a wider range of alternatives. These include a tax based on the value of land rather than property.
Green MSP Patrick Harvie said: 'We are obviously delighted to open up the consultation to include alternatives, including our idea of a land value tax, which is used in Denmark, South Africa, Jamaica and some Australian states. The key words in our amendment were fairness and local accountability – we believe that will only leave our option as the way forward.'
At the SNP spring conference in Edinburgh last weekend, Salmond attacked the UK government's 'unreasonable behaviour' towards Holyrood. He cited as examples the 'threat' to withhold council tax benefit, the Treasury's attempt to 'block' an LIT and a refusal to apply the Barnett Formula to UK prisons and health spending.
PFapr2008
