06 June 2008
The minority Scottish National Party administration at Holyrood is facing further problems over its plans for a local income tax after admitting that tens of thousands of students could be liable to pay it.
And as opposition parties seized on the admission as further evidence that the proposal should be abandoned, UK Chancellor Alistair Darling made it plain that Scotland is 'never going to get' the £400m in council tax benefit money that SNP ministers say they are entitled to retain once the LIT is introduced.
The row over the liability of students who work and earn income erupted after Finance Secretary John Swinney admitted in a parliamentary reply that more than 55,000 full-time students – who do not pay council tax at present – could be liable for LIT.
The number of full-time students in Scottish institutions in 2006/07 was 228,795, said Swinney. 'Initial estimates indicated that perhaps around three-quarters of these would not earn sufficient to bring them over the level of the personal allowance.'
He admitted some students would have to pay but added that a student 'would have to be working 21 hours each week for 52 weeks in the year before they would be liable for local income tax'.
Labour MSP Claire Baker, party spokeswoman for higher education and student support, said First Minister Alex Salmond had tried to claim in the past that his proposals for an LIT would not hit students. 'These figures show the truth,' Baker said, adding that the policy should be dropped.
Tory education spokesman Murdo Fraser said: 'The case for a “local” income tax, which is in reality a nationally set tax, is unravelling by the day.'
In an interview for the BBC Scotland Politics Show, Darling said it would be 'grossly unfair' to the rest of the country if the Westminster government met the SNP's demands that Scotland retains the £400m currently paid in council tax benefit. Salmond 'knew that he was never going to get this money', he added.
PFjun2008
