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Alex can expect some taxing times ahead..



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Published Date: 05 September 2008
ALEX SALMOND called it an "ambitious programme" as he announced the 15 new Bills the SNP plans to put before parliament over the next 12 months. But some proposals are more ambitious than others – and undoubtedly the one that threatens to give him the most trouble is the plan to replace the council tax with a local income tax.
The package unveiled by the First Minister also includes measures to tackle climate change, set up a sentencing council, take further action on alcohol, ban cigarette displays, and separate council and Holyrood elections.

Each of these promises
plenty debate, but it is the Council Tax Abolition Bill which will provoke most controversy.

The consultation exercise over the summer produced an avalanche of critical comments from financial experts, business leaders and unions.

CBI Scotland said it would drive up inflation and scare off investors. The Institute of Directors described it as a "risky path" that would cause "real problems" for business. And Unison, the UK's biggest public sector union, warned of cuts in services and families left worse off.

And, at the moment, there is no majority to get a local income tax through the Scottish Parliament. The SNP would need to win the support of both the Liberal Democrats and the Greens before they could get the bill passed.

Lib Dems are in favour of a local income tax in principle, but they reject the SNP's plan to set the tax nationally rather than allowing councils to decide their own local tax levels. And the Greens say they are "not convinced" about a local income tax, advocating a land tax instead.

Although it featured prominently in Mr Salmond's statement on Wednesday, the Bill is likely to be held back until near the end of the parliamentary year – possibly as late as next June – which means it might not be voted on until well into the 2009-10 session.

The Government believes that still fits with its declared aim of introducing the new tax in April 2011 and the cautious timetable gives plenty of time for negotiations in a bid to secure a parliamentary majority.

The Nationalists hope to persuade Tavish Scott and his colleagues to accept a compromise – for example, having the tax set centrally to start with, making it easier to introduce, and once it has bedded down allowing councils to vary the rate in their own area.

Some detect signs that the Lib Dems are adopting a conciliatory stance.

Mr Scott's official reaction to the SNP's promise of a Bill was short and positive: "We want to see the abolition of the discredited council tax. Liberal Democrats want a genuinely local income tax and we look forward to working with the Government to deliver that."

And a bullish Bruce Crawford, the SNP's minister for parliamentary business, said: "From what I know the Liberals are taking a pretty positive stance on this, we are taking a positive stance, and we will discuss where we can make adjustments that would hopefully enable us to secure that majority in the parliament.

"We are absolutely determined to make sure this Bill is successful."

The Greens say they also expect to be involved in discussions with the Government on the issue.

The SNP claims four out of five households would be better or no worse off under the new tax. It says 67 per cent of households will pay less, 15 per cent will see no change and only 18 per cent will pay more. But the reason so many people benefit is mainly down to the extra £281 million the Government plans to inject into the system, not the change in the system.

And there is also the small matter of £400m worth of council tax benefit currently paid to Scots by Westminster.

That's money UK ministers have repeatedly said will no longer come north if the council tax is abolished, but it is cash the SNP says Scotland is entitled to and which Mr Salmond's government is determined to fight for.

During the Scottish Labour leadership contest, all three candidates have been critical of the council tax and said that they want to reform or replace it, but without putting forward any specific proposals.

And the SNP says comments by Cathy Jamieson and the Tories' shadow Scottish secretary David Mundell appear to suggest they accept the council tax benefit money is cash Scotland should continue to receive.

Mr Crawford insists the Government will go ahead and introduce the Bill, even if Westminster is still refusing to hand over the £400m, but it is difficult to see how the new tax could be made to work without that vital contribution.

There are also practical considerations – like whether Her Majesty's Revenue & Customs will agree to collect it.

But there is a suspicion in some circles that what the Nationalists are really after, when they pursue the local income tax, is a row with Westminster in which the SNP is seen as standing up for Scotland against an unreasonable UK Government trying to deprive Scots of money that is rightfully theirs.

If that is the agenda, Labour ministers at Westminster are playing into the Nationalists' hands by making such a determined stand on the issue.

It is worth remembering that the SNP's declared strategy in power is to prove itself competent in government, demonstrate to people it is "on their side" and win their trust in the hope of persuading them to vote for independence.





The full article contains 917 words and appears in Edinburgh Evening News newspaper.
Page 1 of 1

  • Last Updated: 05 September 2008 9:11 AM
  • Source: Edinburgh Evening News
  • Location: Edinburgh
 
1

First Minister,

Gibraltar Tax Office 05/09/2008 12:34:26
I am pretty sure there are taxing times ahead for Scotsman Publications, more and more of Scottish people are sstopping buying your newspaper faster than any other, does this not concern you in your relentless fight against the SNP?
75-80 % of the public are against the council tax and IN favour of a tax based on your ability to pay. What is hard for you to understand?
2

Linda,

Edinburgh 05/09/2008 12:50:30
WILL YOU BE BETTER OFF? LET'S DO THE SUMS...



Income tax allowances 2008 /09

Personal allowance £ 5,435
Personal allowance for people aged 65-74 (1) £ 9,030
Personal allowance for people aged 75 and over (1) £ 9,180


Edinburgh Council Tax Bands 2008 /09

Edinburgh Council Tax
Salary / Pension Per person
Local Income Tax @ 3p 2008/09

Band A £ 779 £10,000 £ 137
Band B £ 909 £15,000 £ 278
Band C £1039 £20,000 £ 437
Band D £1169 £25,000 £ 587
Band E £1428 £30,000 £ 737
Band F £1688 £35,000 £ 886
Band G £1948
Band H £2338



Other (age) allowances would also have to be deducted before doing 3p calculation



Unison and other Unions should be welcoming a local income tax which benefits their lower paid workers rather than bankrolling the labour Party in Scotland.



The NUS should know that students would have to work at least 20 hours a week before paying any income tax. Then the biggest blow is from Gordon Brown's doubling of the lowest tax band from 10p to 20p. The NUS and Unison have been silent on this issue.



3

Duncan in Edinburgh,

05/09/2008 14:26:47
#2 You keep posting this guff. It's utter nonsense. It assumes everyone who lives in a Band A house has a total household income of £10k, everyone in a Band B has a total household income of £15k, etc. These figures bear no resemblance to reality.

Anyway, the LIT raises £750 million less per year than CT, so I would bloody hope it would cost less too. We'll be getting far fewer council services as a result.
4

Bottoms Up,

Blackhall 05/09/2008 14:57:57
2# Linda

You have based your calculations on single person households, rather than houses with both parents and children earing.

My wife and I have two kids and live in a band F house. We all work and our total income is £105,000.

None of our salaries are over £40,000, so we cannot be considered as high earners.

We will be paying nearly £3,000 as opposed to the £1688 we pay now.

DO YOU THINK THAT THIS IS FAIR?

5

Brian S,

Edinburgh 05/09/2008 15:30:25
#4

I earn over 60k and yes I do think it's fare. Our househould has an combined income of 200k+. Sure our bill will be much higher but I see this tax improving the lives of those on low wages and of pensioners. This doesn't mean I think we should be supporting the benefits cheats and job dodgers.

Sometimes you have to think what it means to society as a whole rather than self interest. I know I will be shot down in flames for my views, but I would glady pay more to help those genuinely suffering with their living costs.
6

Peter - very disappointed/concerned,

Edinburgh 05/09/2008 15:47:32
#4 Bottoms Up,Blackhall

You've got to be having a laugh, of course it's fair.

I was originally opposed to the Poll Tax, but later became convinced that it was indeed a fairer system and that the Tories would have 'pulled it off' it they had put a little more thought into its conception and operation.

We all use services and these have to be paid for, therefore everyone who works (and possibly earns over a certain amount) should pay.

The rate is of course a different matter and at present, we have a government (Westminster) which has made absolutely no effort to control the 'Town Hall pirates', hence the huge rises in CT which we have seen. I hope that the Lib Dems don't put to much pressure on Alex Salmond to allow Local Authorities to set rates as this would make a mockery of the new system and would leave we taxpayers at the mercy of rapacious COSLA

I for one will welcome LIT as any tax must reflect earnings and ability to pay. Taxes based on property values are both unfair and unrealistic.

I don't quite know how we deal with those 'unemployed' who won't raise a finger to find work and pay their fair share, but perhaps a method of making them do useful work within their communities until such time as they become gainfully employed could be investigated.


#3 Duncan "We'll be getting far fewer council services as a result"

Duncan, we are all paying more and more for less and less in the way of services under the present system - let's have the courage to try something different.
7

Tormod,

Auld Reekie 05/09/2008 15:48:31
No 4. I do think that is fair because it is based on your income.

What I find really amazing is that we pay NI and Income tax on our salaries this is fair.

But calculating a tax on income to provide local services is not please explain why?
8

Edward,

05/09/2008 15:48:36
#4 Bottoms Up
Im curious as to how you calculate that you will be paying nearly £ 3000 as opposed to £ 1688
Is £ 2498 nearly £ 3000?
So if there are 4 Adults earning over £ 20,000, which presume you are, the each adult is liable for £ 624 per year or £ 52 per month
Now consider this
A pensioner or person on low income, who is receiving £ 17,000 per year as total houshold income living in band F pays £ 1688 per year on council tax thats £ 141 per month, but under LIT, they would pay £ 347 per year
You see where Im coming from here
Its about those who can afford should pay there share and those who cant afford should pay less
9

Beavers,

Auld Reekie 05/09/2008 15:49:57
How will this local tax work for people who have a property in scotland but work abroad and don't pay an tax in the UK.???
10

Tormod,

Auld Reekie 05/09/2008 15:59:00
When I was a single man I paid my NI / Income tax / CT / and corporation tax. I haven't seen a doctor in 17 years or used much in the way of direct services

Quality of life is not just about the amount of money you have.
11

Linda,

Edinburgh 05/09/2008 16:19:49
3 Duncan in Edinburgh.

You miss the point the tax people pay at 3p in £ stays the same whatever Council Property band they are in.

Therefore someone on £35,000 a year in a band A house would pay more but less if they stayed in a Band B or higher. Someone on £25,000 or less in Band D would be much better off under Local Income Tax
12

Linmal,

Livingston 05/09/2008 16:30:22
#11 Linda you too are missing the point - it does not matter where you live, it will be a local INCOME TAX ie you will pay on what you earn not on where you live. Clear kapish?
13

Peter - very disappointed/concerned,

Edinburgh 05/09/2008 16:36:38
#9 Beavers,

That is a good question, do you suppose that there will be many people in this category? If it's only a smll fraction of the population, then it may not be worth worrying about as they won't be receiving/needing services anyway (water supply?).

#12 Linmal, "it will be a local INCOME TAX" perhaps it would have been better named "Local Authority Income Tax", but hopefully some level of control will be enforced on COSLA, or they will just burst the bank (as usual!!).



14

Beavers,

Auld Reekie 05/09/2008 16:48:33
13#
I fall into this bracket and I dont earn enough on savings etc to pay tax.
I still get stung heavily for council tax so maybe this would be a good thing for me....
15

Heed thi baw,

07/09/2008 19:23:42
LIT is a disincentive on enterprise and commerce. Business people from one-man-band to multi-nationals will have to consider the taxation position in producing new revenue. Even the lower paid who get a 100 odd pound in their xmas paypacket will be taxed. The middle classes will feel hardest hit - after all, they feel taxed enough. This is who this tax is relying upon to make up the shortfall from the savings to the lower paid.

Salmond believes he can't lose with LIT. If he wins the Bill, he will say he has stood up for the Scottish people. If he loses, he will simply blame Westminster and use the loss as an example of Westminster inflexibility towards Scotland.

One question to Salmond is 'Under independence, will LIT stay at 3p, assuming there will be no Scottish Block Grant and Council Tax Rebate?'

The SNP claim that 67% of households will pay less at 3p. If that rate needs to change, say to 4.5p (as is predicted if the Council Tax Rebate is not forthcoming), how many households pay less and how many pay more? If more than 50% are worse off, the SNP will get voted out.


 

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