30 May 2008
The Scottish Government's plan for a local income tax has suffered a further setback after claims by a leading professor of law that it 'almost certainly' breaches the European Charter of Local Self-Government.
Christopher Himsworth, professor of administrative law at Edinburgh University, told the Scottish Parliament's local government committee on May 28 that the plan for a single rate of tax for all councils was unlikely to comply with the charter.
The professor's claim comes just weeks after the Treasury warned that the Scottish Government did not have the legal powers to introduce a nationally set LIT.
As Public Finance disclosed last month, Treasury sources said the proposal to levy a 3p in the pound tax, set centrally and administered and collected nationally, was
'not a devolved matter in terms of the Scotland Act'.
In a submission to the committee, Himsworth said that when devolution was introduced, the UK government specifically invoked the European charter's terms as providing the standards according to which Scottish local government would be expected to develop.
The charter contained many provisions designed
to protect the powers of councils and their freedom to exercise their powers without undue central government restraints.
According to Article Nine, at least part of councils' resources 'shall derive from local taxes and charges of which, within the limits of statute, they have the power to determine the rate'.
Himsworth said: 'It seems to me that a proposal to remove from Scottish local authorities any power at all to determine the level of their own financial resources through local taxation is almost certainly in breach of Article Nine.'
He added that if there were other means whereby at least part of the tax could be under the control of local authorities, there was unlikely to be any difficulty.
'Somewhere or other in the totality of local authority spending there has to be an element which derives from locally fixed taxes or charges,' he said.
Professor Richard Kerley, vice principal responsible for international strategy at Queen Margaret University, Edinburgh, said he believed it might not be competent under the devolution legislation for the Parliament to introduce a local income tax as proposed by the Scottish government.
'I have previously expressed these views cautiously but I am interested HM Treasury now appear to take a similar view – whatever their reasons for doing so,' Kerley said.
PFmay2008
