Bad for families, students, top companies, pensioners and now Scotland's biggest council – latest blow to SNP's income tax

SCOTLAND'S largest council yesterday became the latest organisation to come out against the Scottish Government's plans for a local income tax.

Glasgow City Council has claimed it would be left with a funding gap of between £60 million and £133 million if the Scottish Government's plans of replacing the council tax with a centrally set 3p additional income tax were to go through.

It has said that, in reality, local income tax would have to be set at 4.5p to pay for the services it needs to provide.

Glasgow City Council joins a growing number of organisations and experts to come out against the local income tax.

This week, the business group CBI Scotland attacked the move, and it has found ill-favour with unions, students, economists, businesses and academics.

Labour has also claimed that more pensioners, who were supposed to be the winners from the local income tax, would be paying than currently pay the council tax.

Their figures show that 339,000 pensioner households pay the council tax, whereas 412,000 pensioners would be billed through the local income tax.

The Convention of Scottish Local Authorities will meet on 27 June to discuss the proposal and will probably come out against the idea of the tax being set centrally.

But there was comfort for the Scottish Government from a calculation by Glasgow City Council that 72 per cent of households would be better off if the local income tax was set at 3p, and only 21 per cent of households worse off. But if it were set at 4.5p, 46 per cent would be better off and 47 per cent worse off.

Steven Purcell, the leader of Glasgow City Council, said: "We've taken a long, hard look at this proposed new tax and I simply cannot see how it can be made to work without increasing taxation for a large number of people or drastically cutting council services.

"We will either see cuts of tens, potentially hundreds, of millions of pounds or nearly half of Glaswegians will pay substantially more tax.

"Both outcomes would be a disaster for Scotland's economy."

But a Scottish Government spokesman claimed that the vast majority of Glaswegians supported the 3p local income tax proposal and the abolition of the council tax.

"The council's own figures give the game away," he said. "They show that under a 3 per cent local income tax, the vast majority of Glaswegians would be better off."

BIG NAMES AGAINST THE NEW TAX …

CBI Scotland: "The Scottish Government has failed to make a convincing case for changing the local tax system."

Matt Smith, Scottish secretary for Unison: "The introduction of a further tax on wages will either make many families worse off, or lead to cuts in public services."

Glasgow City Council: "The proposals would lead to a funding gap for Glasgow City Council of between £60 million and £133 million per annum."

Alistair Darling, the Chancellor: "Local income tax would be a disaster for the financial services industry."

Miles Templeman, director-general of the Institute of Directors: "A local tax we think is a risky path that may lead to problems."

James Alexander, president of NUS Scotland: "My concern is that students, who are amongst the poorest people in Scotland, are going to face the prospect of paying local income tax."

Professor Richard Kerley, of Queen Margaret University, expert on local government finance: "The local income tax may be unconstitutional."

Professor Arthur Midwinter, of Edinburgh University, former adviser to the Scottish Parliament's finance committee: "This is the least rigorous set of proposals for local taxation since the community charge green paper in 1986."

Professor David Bell, of Stirling University, an expert in economics: "If you increase income tax through a local income tax, we really don't know – will people jump the Border?"

… AND ITS HIGH-PROFILE SUPPORTER

SNP: "The local income tax is a fair system reflecting individual ability to pay, unlike the unfair and discredited council tax which Labour and the Tories want to keep. It is important to bear in mind that the Scottish Parliament has already voted in favour of the principle of abolishing the council tax."