Taxing times

YOU would think that Alex Salmond, a canny politician who has been keeping a keen and self-interested eye on the political turmoil at Westminster, would have learned a lesson from Gordon Brown's travails: when in a hole, stop digging.

The Prime Minister is stuck in a trench of his own making, with every effort to extricate himself backfiring. Last week, his troubles only deepened as he U-turned on more powers for Holyrood and floated, then abandoned, plans to help tackle fuel poverty. This was typical of our hapless Prime Minister, but frankly we expected more from our sure-footed First Minister.

Hopes were high that when Salmond stood before a new session of the Scottish Parliament on Wednesday to unveil his second programme for government, it would either omit his planned local income tax (LIT) or detail efforts to park the idea. LIT, after all, has been lambasted on all sides. Economists say the sums don't add up – with or without £400m in council tax benefit from the Department for Works and Pensions. Lawyers think it may be illegal, while the Institute of Chartered Accountants of Scotland brands it unworkable. The Institute of Directors, CBI Scotland and the Scottish Chambers of Commerce all warn it would make Scotland the highest-taxed part of the UK and might drive out businesses.

Salmond dismissed his critics last week as "vested interests" who had worked out that they would pay more under LIT than the council tax. What, then, of the National Union of Students, which claims LIT will hit tens of thousands who work to put themselves through university and college? What of armed forces personnel who get council tax rebates when posted abroad but would have to pay the whole LIT? What of disabled people who, the Low Incomes Tax Reform Group has warned, could lose out on allowances?

This newspaper has argued for more than a year that LIT would be bad for Scotland. It has too many loopholes and will place a further burden on aspiring middle-class Scots who do so much to generate the nation's wealth – and who are already overtaxed. Yes, the very rich would face even higher bills, but how many job-creating entrepreneurs and businessmen would move south rather than pay up?

With so many good arguments against LIT, no wonder many expected a sidestep, if not a Brown-style U-turn, from Salmond. That it did not come may be because the First Minister, despite all the evidence to the contrary, remains convinced that LIT is right. He may also believe that he can deliver it in the Scottish Parliament, especially after some encouraging noises from the Lib Dems. But even with every Liberal on board and if Salmond can convince the sceptical independent Margo MacDonald to back him, the SNP would be short of a majority in Holyrood. The Greens, who could make up the numbers, made it clear last week that they think the SNP's LIT would merely add to the "misery" of Scottish taxpayers.

So the suspicion grows that Salmond is not, in fact, engaged in a principled battle which he expects to win. Instead, his stance looks like political posturing: he knows he cannot enact his key policy; instead, the First Minister is working towards a point at which he will be able to throw up his hands in mock dismay and tell his supporters "I tried" – while pinning the blame for the fall of a key policy on the opposition parties, especially Labour. This is why his message has been all about abolishing the "unfair" council tax, rather than increasing the income tax we pay.

To be clear, no one can seriously argue that the current council tax is perfect. Reform is needed to make it more reflective of ability to pay – and of inability to pay among low-income groups, especially pensioners. But LIT such as that proposed by the Scottish Government is not the answer. Lib Dems in particular should realise that it would do the opposite of what they want, by further centralising revenue-raising ability and control over policy.

So, instead of clinging on to this shibboleth, the First Minister should accept that the game is up for his LIT. He should shift his focus on to policies which Scots genuinely support – and on Thursday, Brown's U-turn on more Holyrood powers handed him an opportunity to do just that. Salmond should grab it and use such powers to make Scots more financially and socially comfortable – not screw more tax out of them.