05 September 2008
Opposition parties have condemned the Scottish Government's plans to replace the council tax with a local income tax.
Leading local government finance experts also claimed that ministers had failed to respond to 'flaws' in the tax plan raised during the recent consultation.
After months of controversy over the proposals to fix a nationally set LIT of 3p in the pound for Scotland's 32 councils, First Minister Alex Salmond announced on September 3 that legislation on LIT was among the 15 Bills in the government's 'ambitious' programme for the next year.
Labour said the plan faced 'near-universal opposition', while the Scottish Tories said the scheme had been 'comprehensively ridiculed'.
The SNP minority administration, currently without sufficient parliamentary support to get the legislation through, faces having to negotiate a compromise with the Liberal Democrats. They favour an LIT set by each council.
Salmond told the Parliament that it was time to replace the 'unfair' council tax with an alternative based on ability to pay. He said it would lift 85,000 individuals out of poverty and save the average Scottish family between £350 and £535 a year.
He added: 'I have no doubt Scotland will judge harshly any MSP who votes to keep the council tax in the face of the overwhelming benefit that would flow to millions of Scots.'
The SNP's decision to press ahead with its plans follows a consultation in which a number of leading professional bodies warned that an LIT would result in a massive shortfall in income for councils and seriously erode their financial powers.
Don Peebles, policy manager for CIPFA in Scotland, told Public Finance that the decision to press ahead with a Bill seemed to have been done in advance of any analysis of the consultation submissions.
He said: 'As an institute we are still interested in seeing answers to the questions we posed, not least our concerns about the fundamental shift in accountability and the estimated shortfall of £750m in tax yield.'
The 15 Bills include planned legislation on public service reform. This is expected to include proposals to cut the number of public bodies by 25% by 2011 and to reform the scrutiny process for public services.
PFsep2008
