LIT is a national levy, Scots are warned

11 Sep 08
The local income tax planned by the Scottish Government is not a local tax but a national levy, which would result in councils becoming the agents of central government, a leading public sector finance expert has warned. Professor George Jones, emeritus professor of government at the London School of Economics, said the proposal would be bad for Scotland and damage local government.

12 September 2008

The local income tax planned by the Scottish Government is not a local tax but a national levy, which would result in councils becoming the agents of central government, a leading public sector finance expert has warned.

Professor George Jones, emeritus professor of government at the London School of Economics, said the proposal would be bad for Scotland and damage local government.

'What you are being offered is not a local income tax,' he told the Scottish conference of the Institute of Revenues Rating and Valuation at Crieff. Jones, a member of the 1970s Layfield Commission on local government finance, added: 'It's a grant set by the Scottish Government, collected nationally and distributed according to the criteria of the Scottish Government.

'It should be called a Scottish income tax. It is essentially an assigned revenue from central government to local authorities. That's why it should be rejected.'

Jones was speaking on September 3, the day First Minister Alex Salmond announced that he was going ahead with the controversial proposals for a nationally set LIT of 3p in the pound. A Bill has been included in the legislative programme for the next year.

Jones stressed that when any local government finance system was changed, it was essential to decide first on the kind of relationship there should be between central and local government.

This, he argued, was one of the key lessons of the 1976 Layfield report on local government finance.

'I do not see any evidence that the Scottish Government has gone through that process or, indeed, that local government has gone through that process,' he said.

Jones argued in favour of a 'genuine constitutional settlement' for local government in both Scotland and England that would enhance local accountability and ensure that councils were less dependent on central government grants.

He believed there should be a shift to local financial responsibility, and that this could be achieved through a reformed property tax, supplemented by a genuine, locally determined income tax.

He warned his audience – largely made up of senior officers involved in the collection and administration of council tax – that the LIT plans as proposed 'will make you just the agents of the Scottish Government'.

PFsep2008

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