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Swinney hints at SNP compromise on local income tax

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Published Date: 10 March 2008
SNP ministers will have talks with senior Liberal Democrats later today in an attempt to secure the support they need to have a local income tax introduced in Scotland.
John Swinney, the finance secretary, will meet Tavish Scott, the Lib Dems' finance spokesman, to find out if the parties can reach an agreement on scrapping the council tax.

Both want to introduce a local income tax, but the Lib Dems want the ra
te set locally by councils, while the SNP wants a single rate set nationally.

Last night, Mr Swinney indicated he was prepared to compromise and revealed that the consultation paper on the issue, due to be published by the Scottish Government this week, will include the option of setting the rate nationally to start with and then letting councils set the rate after a few years.

However, the Scottish Government's hopes of bringing in the scheme have been hit by further setbacks from the UK government.

Yesterday, Her Majesty's Revenue and Customs (HMRC) issued a statement making it clear that it would not take part in any local income tax scheme devised by the Scottish Government.

Scottish ministers would need the help of HMRC to access the salary records of all those who would have to pay the new tax. Without this, they would find it very difficult to implement the new tax.

Mr Swinney said he expected to hold talks with HMRC after his detailed plans were published later this week.

He added: "We are working on the assumption we can establish a co-operative arrangement with HMRC. I hope they are willing to assist us because it would be an efficient way to go about the collection of the local income tax."





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1

bill inch,

EDINBURGH 10/03/2008 01:08:23
While these halfwits are engaged in there backdoor indepenance issues, Scotland can go to hell.
2

frank mcbride,

10/03/2008 01:28:01
It looks like Westminster is at it again!

As for #1,2, above, the "pretendy" is the elected, legitimate government in Scotland, and as such, governs in the name and interest of the Scottish people, until that people decides otherwise.

Do you deny the rights of the people of Scotland, or the legitimacy of the Westminster Parliament?

Just wanted to know.
3

AB_R,

10/03/2008 05:57:41
Under the Devolution Act, the Scottish Government have the ability to change the income tax by +/- 3%.

As such, the SNP plan to raise income tax by 3% accross the board, while stopping the Council Tax makes sense in the short term.

As this was part of the legislation passed by the Westminster Government, I would hope that the HMRC computer systems have been updated to cope with this scenario.
4

Colin Wilson,

Aberdeen 10/03/2008 06:44:39
As AB_R points out, the Scottish Parliament has the authority to vary income tax in Scotland by +/- 3%. It has this authority by virtue of the legislation passed by the UK government when it granted devolved self-government to Scotland.

This authority could only ever be exercised with the co-operation of the UK government's Dept of Revenue and Customs. By refusing to co-operate, they are undermining legislation passed by their own government. In that respect, I'd say that their refusal to co-operate is unlawful. The Scottish Government ought to take court action to order the Dept of Revenue and Customs to comply with the devolution legislation.
5

nabodican,

Rural Scotland 10/03/2008 07:33:32
We should remember that it is the Scottish people who were stupid enough to vote for tax raising powers.
As it was UK legislation, HMR&C are clearly wrong in refusing to take any part in it - then again HMR&C are only doing what their puppet master says.
6

Auld Twa,

Edinburgh 10/03/2008 08:13:56
As the Scotland Act stands -
1 - Scottish Government can only vary income tax nationally.
2 - Her Majesty's Revenue and Customs will collect this tax.
Local income tax cannot be set by councils or collected by HMRC.
7

Colin Wilson,

Aberdeen 10/03/2008 08:21:12
Re #7 : That's right. The Scottish Government's proposed new tax does meet the conditions mentioned in 1 and 2. It's a "local" income tax only in the sense that the revenue will be used to fund local government. As far as HMRC is concerned, the intended purpose should be of no concern.
8

Colin Wilson,

Aberdeen 10/03/2008 08:30:14
Re #9 : the other aspect of this is that, in return for the extra income tax, the Council Tax would be abolished.
9

David MacVicar,

web 10/03/2008 08:39:07
This is all bluster from the UK but has an element of truth. It is not the tax raising that is the issue (its is just a parameter in a piece of software anyway, as reported by a government employee some time ago).

What is at issue is the administration of using that money for Local tax, which is not their responsibility and would require new procedures.

Common sense and cooperation needs to take hold here otherwise this is going to complexify the admin as opposed to simplifying it.

Personally I think it is a result of a poorly thought out devolved responsibility. If we have tax powers we should have full tax powers or not at all, plus fully devolved administration, collection etc. There are too many tweaks, half measures and fiddles.

This was done to give the illusion of devolved control and the result is that when you have a government with the audacity to ACTUALLY use those powers it results in conflict with the fat controllers in Westminster and exposes the farce of the current level of devolution.

This limbo also provides fuel to the self_loathers like poster 1 and 2 who deride anything to do with our own parliament and want it to fail. Thankfully they are a minority and the only certainty from here on in is that Scotland will gain major new powers in the next decade and start to use them.
10

Liberal for life,

Dunblane 10/03/2008 08:48:35
Clearly many correspondents to date don't understand the reforms proposed. By collecting taxation through this already fairly sophisticated IR system the administrative savings alone will release much funding. As usual the problems surrounding those usually rich people who can swick their way around any fairly distributed taxation based upon the ability (or capacity) to pay will have to be properly addressed. This should however not detract from the real merits of the system that will help the poorer and the retired in ways that they might also have to rely less on supplementary benefits etc, so another admin saving in the pipeline. Detractors are ill-informed or maybe just plain selfish, thats for sure.
11

Frere Jacques,

Glasgow 10/03/2008 08:51:27
Setting up a proposed local income tax is not the same thing as using the Parliament's tax varying powers, even if it would work out at the same rate. The Scotland Act sets out the procedure to be used for varying income tax. If that route is used, HMRC probably has little option but to go along with it; if it is not, and if a tax is brough in by separate legislation, they don't.

I presumed when the SNP announced that their tax would be centrally set at 3p, they were simply going to use the tax varying powers, specifically to oblige HMRC to collect it. The problem they now have is that the Lib Dems are demanding some form of discretion for local authorities, which would rule out that course of action.
12

James Dickson,

Mozambique 10/03/2008 09:10:11
I remember Alex Salmond saying "Can pay won't pay" regards the poll tax now he wants me to pay another 3% tax to the scrounging brigade. As long as it's something for nothing Alex Salmond seems delighted.
13

The Tin Man,

Over the Rainbow 10/03/2008 09:12:58
#13 Frere Jacques

Exactly. If the Edinburgh Gov. wish to use HMRC to collect a so-called 'local' tax, it would require new legislation. From Westminster. HMRC is funded by all tax-payers in the UK. Why on earth would people in England & Wales be in the slightest bit interested in funding 90% of the additional costs incurred by HMRC associated with the collection of a 'local' income tax in Scotland? Jeez...
14

Mr. Lachie Todd,

Edinburgh 10/03/2008 09:26:39
1# Pretence? What pretence?

In 1922, the very first devolved parliament was introduced at Stormont! In 1932, under much pomp and circumstance, King George V and Queen Mary officially opened the Northern Ireland Parliament, consisting of the Lower House (of Commons) and Upper House (Senate) when it moved into its new building at Stormont!

This devolved parliament governed Northern Ireland until 1972 and, on 8th May, 2007, after the cessation of the Troubles, its successor Northern Ireland Assembly with full Executive powers was officially installed.

Like the Government of Ireland Act, and its successor legislation, introducing a power-sharing Northern Ireland Assembly, the Scotland and Wales Acts are now enshrined in the constitution of this unitary state.

Like Stormont, Holyrood is a viable, fully functioning,
unicameral, devolved parliament which enacts laws for the Scots, and which does not require a revising chamber like the House of Lords.

Devolved government is now the status quo and enshrined in the constitution of the United Kingdom!

Pretence? The only pretence is in the closed minds of those Unionists who are still in self-denial and will not acknowledge the realpolitik of the constitutional changes which have taken place in this unitary state!

15

connaughtboy,

stonehaven 10/03/2008 09:43:22
#9 Joe

You don't seem to understand the system. Many people will be paying lower taxes. Incidently, you are wrong to assume that only SNP supporters are in favour of the LIT. Around 88% of the public agree with it which means that it crosses party lines.
16

connaughtboy,

stonehaven 10/03/2008 09:51:45
Labour must be fizzing when they see their ex-coalition partners co-operating with the SNP. This mature behaviour is clearly beyond Scottish Labour as Andy Kerr's petulant interview on Radio Scotland this morning so clearly proved.

When will dim-wits like Kerr realise that they are talking down a system that is favoured by the overwhelming majority of the electorate?

Mark my words, they will be punished by that same electorate.
17

,

10/03/2008 10:04:47
Comment Removed By Administrator
Reason:
18

Miss H,

10/03/2008 10:17:11
7 that's quibbling. It is a nationally set rate of 3p in the pound. It is up to the government what they do with it, not Westminster. Equally, the present council tax benefit money is part of the Scottish block grant. It is up to the government what they do with it, not Westminster.

What is amazing to me is how stupidly Labour is handling this. If they really wanted to safeguard the future of the Union they would be adopting a more flexible attitude. As it is they are making the case for full fiscal autonomy even more attractive!
19

Miss H,

10/03/2008 10:18:49
12 Liberal -explain to us how LIT will work in the context of a devolved aministration.
20

Colin Wilson,

Aberdeen 10/03/2008 10:24:12
Re ptdoug (#26) : "Her Majestys Revenue and Customs have said they will refuse to co-operate with the proposed tax reforms"

They ought not to have any choice in the matter. The Scottish Parliament's right to vary income tax is clearly set out in the devolution legislation as enacted by the UK parliament. If HMRC continue in their refusal, then the Scottish Government should be looking for a court order.
21

Doh,

10/03/2008 10:28:48
#29

IS that a trick question?

Surely each local council can sets its rate and then each individual tax payer will pay that rate based upon their primary residence.

If Labour obstruct the introduction of LIT then I think it mark the end of the road for them as a party of left - i.e. one in favour of progressive taxation.

I think one argument in favour of LIT which is not pushed enough is that although some will pay more now - when they are working and perhaps a dual incomes - they will probably pay less if their circumstances change - redundancy, single salary and of course retirement.

Its LIT time.
22

Nikostratos,

10/03/2008 11:24:01
#4

Under the Devolution Act, the Scottish Government have the ability to change the income tax by +/- 3%.

As such, the SNP plan to raise income tax by 3% accross the board, while stopping the Council Tax makes sense in the short term.

Would be nice though if they used there(devolved) powers to reduce income tax by 3% and put money back into peoples pockets. I am sure the conservatives would approve.


#31
"I think one argument in favour of LIT which is not pushed enough is that although some will pay more now - when they are working and perhaps a dual incomes - they will probably pay less if their circumstances change - redundancy, single salary and of course retirement."

Uh yes it is probably safe to say people who are made redundant, or have to start relying on one income or retire will pay less income tax...it being based on having some income.........


what do you do about areas of low income and high deprivation.........where does the money come from just out of interest..........
23

Sanny,

10/03/2008 11:45:28
No doubt some will see this as an about turn by the SNP or say they - some political party - have forced a rethink. They would be wrong, this is about real politics. Politics is the art of the possible!

The SNP have shown, that unlike inflexible Tory's or Labour (LD's don't count), they are prepared to do what is best and achievable for the country. This is real grown-up Politics and an example to Westminster!
24

Brian Hill,

Edinburgh 10/03/2008 12:04:22
This strikes me as common sense. Holyrood provides the basic framework, local authorities have room to manoeuvre within the framework, satisfaction all round.

Just another example of 'Intelligent Government' from the SNP.
25

Saoghal Beag,

10/03/2008 12:30:24
28 Miss H at least labour are consistent in handling antything, part of the reason they are no longer running holyrood other than through their petulant behaviour and string pulling from westminster. it will all come back and bite them.
26

Doh,

10/03/2008 13:47:00
#32 Niko,

Areas of low income?

You appreciate that council tax only accounts for about 25% of local government spending - and that about 50% is aleady block grants from central government.

Have you really thought about what you are saying - an area of low income - will justt impose higher council taxes on those with less income - without respect to their individual circumstances.

A local income tax would at least judge each taxpayers ability to pay - rather then burn them out thier home.

LIT is fairer and is also transparent - unlike the council tax it is not really necessary to have annual increases which are only to make up for inflation.
Thus when a council puts up LIT you know they have increased expenditure.

LIT is fairer and simpler than council tax (basically the rates).
27

Allan(handofgod137),

10/03/2008 14:14:58
#18 Where do you get your figure of 88% from?
28

Foulkes Off the CyberNat,

Edinburgh 10/03/2008 14:19:48
32

Aye unionist maths at its best. If the SNP had reduced the income tax by 3 per cent and kept the council tax instead then this years council tax increase of 4% would have come into effect in Scotland as well as the rest of the UK and what about the following years 4 5 6 plus % increaces wouldnt come as a surprise. Council tax raising is out of control nearly every if not all councils have raised the levels way beyond what they needed to be.
Thats the problem with giving local councils fiscal powers they inevitably abuse them. They will spend every penny they are given and then demand more its the only way they know how to work.
You know it I know it and so does everybody else.
29

The Master,

10/03/2008 14:24:10
Am I alone in coming to suspect that this policy was deliberately introduced by the Nats in order to stoke up trouble with Westminster? The whole point of electing local councils is that they should be accountable to their electorate, and the main way to ensure this is for each Council to set its own council tax rate. In light of this, the SNP’s insistence that LIT will be set nationally, and therefore is encompassed within the parliament’s tax varying ability, is nonsensical.

I still fail to see how the current council tax system is in any way unfair and, unlike you Tartan Tories, just cannot bring myself to feel sorry for the retired couple living in a large house on which they can no longer afford to pay council tax. Doesn’t your heart just bleed for the poor little rich people who no longer enjoy the sizeable income they had during their working years? Don’t you just wish to favour this group over hard working families with two wage earners who can only afford to live in a modest property! I think this is the issue that will really bring home to people what you Nats are really about (if it ever comes to fruition, that is!)
30

Jock 107,

10/03/2008 14:27:49
Would English folk be able to claim non-domiciled status to avoid this?
31

Miss H,

10/03/2008 14:32:52
31 We've just been told that this cannot be done in the devolved context. That's why it's a flat rate 3p because that is allowed for in the Scotland Act.

So the Lib Dem position is that LIT can happen on a UK wide basis or not at all.
32

The Master,

10/03/2008 14:35:44
#35 Methalions: the Tories were convinced that the poll tax would rescue them in Scotland (and indeed it did initially prove popular in their heartlands), but it proved to be a poisoned chalice from which the party never really recovered. Ring any bells with you, old tax? It won’t be long before we’re all hearing about Poll Tax 2 (88% support or not!), take it from me! As with the poll tax, the concept may be popular, but just wait to see the fallout if it ever actually looks like coming into effect! Am I right or am I right!
33

Miss H,

10/03/2008 14:36:38
42 Local councils cannot set variable rates of local income tax. Westminster will not allow them to.

Take it up with Westminster if you don't agree with that.

If you cannot see how council tax is unfair you are a cold hearted callous and cruel person who doesn't give a stuff about the poor, the weak and the dispossessed.
34

Doh,

10/03/2008 14:46:42
#45 master

No you are wrong I think LIT will reveal the real differences between progressive parties and those that support regressive taxation. I think the public will support it and the Labour party will alienate even more of their natural supporters.

In any tax change their are winners and losers, but for LIT the winners will be the poorest and the losers the richest. That is quite different from the poll tax. Hence my optimisim.


#44 Miss H

Why? I think it come be introduced for Scotland. Swinney was quite upbeat on the Sunday news show.

Scotland requires full fiscal autonomy - you can see that as a step towards independence - I would see it as step towards a more stable and modern union.
Win win.
35

The Master,

10/03/2008 15:09:52
#46 Miss H: council tax rebates are available to the disadvantaged in society, so how is it unfair? The more financially challenged tend to live in ex council properties or in less desirable areas and therefore necessarily pay far less in council tax than better off members of society and those, such as myself, who own more than one property How then is the current system unfair, pray tell! I just don’t get where you Nats are going with all this and, like I said above, can only imagine that either it’s yet another excuse to pick a fight with Westminster or it’s an attempt to butter up your core vote in Tartan Tory areas such as your Perthshire heartland.
36

Miss H,

10/03/2008 15:14:35
47

What the SNP is proposing can be brought in under the current powers of devolution. What the Lib Dems support - i.e a variable LIT - can't.

So either the Lib Dems need to argue that the Scotish Parliament takes full fiscal powers - which at the moment they are not - or they should admit that the only way their policy can be introduces is on a Uk wide basis.
37

Miss H,

10/03/2008 15:22:41
48 You are clearly divorced from reality Master.

Council tax has risen on average by 60% under Labour.

It is a regressive tax which hits people on a low or fixed income - but who nevertheless do not qualify for council tax benefit - the hardest.


38

The Master,

10/03/2008 15:44:07

#50 Miss H: you say that council tax has risen by 60% under Labour, but surely the main function of local democracy is to allow council tax payers to express their views on the rate of council tax at the ballot box. For example, if council tax payers live in a Labour controlled area and feel that either the SNP or the Tories are offering budgets which will lead to a lowering of council tax, then they are free to support either of these two parties with their votes.

If sections of society are living in relatively impoverished circumstances but nevertheless do not qualify for council tax benefit, then they have the options available to them of either trading down the standard of their accommodation or moving to a different local authority area. Such are the day to day choices which we all make as we seek to balance our household finances and I completely fail to see how there is any unfairness inherent in this.
39

Miss H,

10/03/2008 15:56:49
52 Council tax rose by that order across local authorities irrespective of political control. This was because central government systematically underfunded nationally imposed policies which they required local government to implement.

Ending that practice is a big part of what the new agreement - the concordat - between central and local government is about.
40

bill-alba,

Fife 10/03/2008 15:59:45
When the Scottish Government have decided on a replacement they should implement it immediately, If Westminster tries to block it, the government should then set up a system whereby they bypass Westminster.
41

Doh,

10/03/2008 16:06:17
#50 Master

You are divorced from reality.
"trading down the standard of their accommodation or moving to a different local authority area. Such are the day to day choices"

These are not day to day choices but major choices that we tend to make only a few times in our lives.

Your argument is not only weak but laughable.





42

GP,

10/03/2008 16:11:29
It is a shame that very quickly the SNP wish to raise taxes. They have a glorious opportunity to change the fundamental payments for local services but instead of reviewing the process they simply decide to increase tax to fund their idea.
why not reduce income tax by 3p in the pound and set challenging targets for local authorities to redcue their spends by say 15% in year 1 10% in year 2 and 5% in year 3.
Then we can see how good our public servants are and if they qualify for the private industry salaries they claim they are worth.
43

Doh,

10/03/2008 16:13:52
#49 MissH

Are you sure that the Scottish government cant introduce variable LIT? I thought it had the authority but that the HMRC are just saying they can only be asked to implement it by Westminster.

As for fullfiscal autonomy - I think that is pretty much the direction of LibDem policy in keeping with a 100-year old commitment to home rule and more recently with David Steel's discussion document of last year.

Hopefully that is the way it will go.

However if Labour obstruct LIT then the political fall out will be of their own making. In my view showing Labour are a regressive tax party and also with a flimsy commitment to devolution.
44

The Master,

10/03/2008 16:14:07
#54 Miss H: I don’t see why that’s an argument for negating local democracy by imposing a centrally determined LIT. Surely, local authorities have to be accountable to their electorates for the level of LIT and I can only imagine that the SNP will have to give way to the Lib Dems on this on. In any event, if it had been in place instead on the council tax, the LIT would surely have risen just as steadily over recent years to meet nationally imposed policies.

45

Miss H,

10/03/2008 16:14:39
56 You do understand that the SNP is proposing a 3p increase in income tax instead of - not as well as - council tax?

46

Miss H,

10/03/2008 16:18:58
58 I agree that councils should be able to set their own rates of local income tax. But at the moment they could not. Westminster won't allow that.

If you don't think that's fair take it up with Westminster not the SNP. If it was up to the SNP Westminster wouldn't have anything to do with it.

As for your final point - no there was nothing inevitable about council tax going up year on year. The SNP have managed to negoiate a funding settlement and new partnership with local authorities which keeps council tax frozen within their first year in office.

Not so difficult you see.
47

The Master,

10/03/2008 16:27:19
#55 Doh: why is my argument laughable? Take the example of a family on a relatively low income who live in ex local authority accommodation which perfectly adequately suits their needs and attracts council tax band at band C. A second family might live in the private estate a mile away down the road which attracts council tax at band E and, although their household income and family needs are roughly comparable to the other family, choose to run up credit card bills as they seek to maintain a certain lifestyle. That’s the way it goes: it’s a matter of lifestyle choice.
48

Allan (Glasgow),

10/03/2008 16:28:57
58, The Master.

In terms of local acocuntability you are right that voters could have thrown Labour out over the years of huge council tax rises. However, it is crucial to note that the first past the post system provided an inherent advantage to Labour - as has now been demonstrated after the introduction of PR i.e. they are no longer the largest party and have only control, or shared control, of 12 out of 32 councils. The voters therefore did choose.

You question the argument that Council Tax is unfair. Aside to the comments that other posters have provided, you should note that Council Tax benefit has one of the lowest take up rates of any benefit. It is widely regarded as crude, cumbersome, administratively complex and essentially largely ineffective.

On the topic of a LIT, if it comes to pass, I for one am willing to pay more tax if it benefits the poor and disadvantged in society - an ethos once natural to the Labour party but now forgotten. You may feel it is ok for a pensioner to forgo food or heating or a family to have debt collectors pursuing them to pay Council Tax, I certainly do not.
49

The Master,

10/03/2008 16:34:26
#60 Miss H: if the LIT policy is unworkable without the cooperation of Westminster, then why propose it in the first place? Whatever your party’s pretensions to be in charge of a “Scottish Government”, the first rule of politics is surely that you have to “work within the system”.
50

Miss H,

10/03/2008 16:41:30
The SNP is proposing a flat rate 3p income tax instead of council tax with the council tax benefit which is part of the Scottish block grant allocated direct to local authorities. That is workable, affordable, less bureacratic and fairer and can all be implemented within the constraints of the Scotland Act.

51

Doh,

10/03/2008 16:43:54
#61 Master

I will assuem you are not taking the pish and try and explain why your original argument was laughable.

You suggested that people should "trade down" - that of course is rather puntitive if the individual or family concerned have alow income - you are driving them out of their home just to pay a regressive tax.

Of course there is also a financial cost in moving house.

So from your perspective this is a perfect storm - a double whammy. You cant afford the council tax, simple pay more. That is laughable.

We all need a home and I for one dont think we should tax people out of their homes.

Can you tell me why homes should be taxed at all?
Why not just raise council tax on other property like cars or perhaps even computers?


52

The Master,

10/03/2008 16:49:36
#62 Allan: you’re only against the “first past the post” system which was formerly used for electing local authorities because it tended to favour Labour. I would point out that it is a perfectly democratically legitimate system of election and that it’s churlish to argue that Labour should not have been allowed to benefit from the vast resevoir of popular support in Scotland which they have been able to draw on over many years.

As to the low take up of council tax benefits, that hardly implies unfairness. That some of those in need choose to forego benefits for one reason or another is hardly an argument against the system: the fact that they are available if needed surely satisfies social justice concerns.

Why do you think that LIT will be any less repressive than the council tax? There will no doubt be many who currently pay very little in CT as a result of claiming benefit but who will be deterred from taking low paid employment for fear that they will not only have to pay ordinary income tax but now also LIT. In fact, I still maintain that LIT will be most attractive to retired people living in expensive houses which they purchased when they were earning a substantial wage during their working lives but which they could now easily trade down. Where’s the social justice in that?
53

Miss H,

10/03/2008 16:56:51
66 The word is regressive.

Tax systems can be either progressive or regressive depending on whether they are based on the ability to pay.

Council tax is not based on the ability to pay. People on low or fixed incomes pay a much bigger proportion of their income on council tax than people who are wealthier. That is wht it is regressive.

There is another angle to this as well. As you have said council tax benefit is available for the poorest in society and I believe almost half of households in the lowest tax band (or what was the lowest tax band) are on Council Tax Benefit. This means that the withdrawal of os that benefit results in effectively high marginal tax rates which discourage work. So it contributes in no small part to the 'poverty trap'.

It's just not a good tax whichever way you look at it which is why so many people hate it.

54

The Master,

10/03/2008 16:58:45
#66 Doh: no-one is being driven out of their home to pay a regressive tax. Have you ever heard of social housing and shared equity schemes through housing associations? There are all sorts of choices available to those on low incomes and it’s there own look out if they choose to overstretch themselves by opting for a more expensive alternative to one of these options. I just don’t see where you’re coming from here.

Homes are readily taxable because they are a fixed asset unlike a car and, to put it in simple terms, the bigger your house, the more likely you are to be in a position to contribute towards the provision of local services. Council tax is a simple and effective system that works. After the debacle of the Tories’s poll tax, we can ask for nothing more in this country.
55

The Master,

10/03/2008 16:59:14
Correction: post above was in answer to #65.
56

The Tin Man,

Over the Rainbow 10/03/2008 17:07:25
Let's CUT income-tax by 3% in Scotland.
57

The Master,

10/03/2008 17:12:59
#67 Miss H: do I detect a touch of Tartan Toryism from you? Having a go at “the workshy” who don’t live in large detached houses in prosperous rural areas like SNP voting Perthshire, are you? People may choose not to work for a variety of reasons and I very much doubt if the availability of council tax benefit is a significant factor. Also, I fail to see why it is in any way wrong to base local tax on the largest fixed asset which anyone owns, ie their home. As for CT not being sufficiently regressive, this just is not true on the ground. In practice, the bigger the house the more likely you are to be able to pay the council tax and, if someone really is struggling to pay CT, they really should be looking into other housing options, such as shared equity housing association schemes.

58

Miss H,

10/03/2008 17:34:37
Master you are hilarious. Social housing is a choice for anybody that wants it is it? There are almost 300,000 people on waiting lists for social housing right now who would argue with that!!

You are also dead wrong about council tax benefit. There is actually a difference between rural and urban areas. The operation of council tax benefit and housing benefit is one of the reasons why there are a higher number of out-of-work benefit claimants in Glasgow for example compared to high levels of in-work benefit claimants in rural areas. The difference is that rents have been historically higher in urban areas and certainly council tax has been. That's a direct disincentive to work because it means in real terms people end up worse off working. That doesn't make me a Tory - only Tories believe that everyone on benefits is workshy. People who know anything about it know that it is mucg more complex than that.

59

Doh,

10/03/2008 17:35:43
#68 Master

A car is a fixed asset, to own you have to register it.

Actually I am really warming to your beliefs in regressive property taxes.

I think where we diagree is that I think everyone needs a home to live in but you can maybe survive without a car.

So lets get car tax to replace council tax and everyone is happy.

You can always trade down or get the bus.

As for 2 cars at the same address I would give them a discount.

The car tax could also be banded based upon the colour of your car. With a special supplement if it does not much the colour of our front door.

You started this argument saying people can always trade down if they cant afford the council tax.

You ended by saying no one is being driven out their own home by the council tax.

The council tax is grossly unfair because it doesnt take into account the ability to pay and does nto consider the circumstances of the tax payer. All your specious arguments are based upon the wealth of an individual being directly related to thier home.

I think an Aston Martin can easli cost £150,000.
60

morris,

edinburgh 10/03/2008 17:38:14
31

The problem with a localised income tax is people do not neccessarily work in the same local council area as they live.The tax must be deducted at source,so it is taken from earmings at work! That would mean every single employer must acommodate every single council potentially,which could in theory be different, and every single empployee which is different therefore to the rate applied in England and Wales. Its possible to do so,but needlessly complicated and difficult to administer,plus the Scotland Act permits up to 3p in the pound,and its ony 3p which will raise enough money to finance the councils,and 85% comes via Westminster taxation and the rebate allowance is threatened with withdrawal for no reason whatsoever,That money is legitimately Scotlands or it could never have been taken in the first place!
Keep it up Unionists.You are doing the SNPs work for them!YOU WILL PAY FOR THIS I PROMISE!
61

brownlie,

Glasgow 10/03/2008 17:40:24
Who exactly at HRMC made this statement. For obvious reason, Civil Servants can only make statements if given authority to do so by the Government. Any statement of such prime importance would have to be cleared with the Minister - in this case the Chancellor. I am surprised that no journalist has asked the Chancellor to comment on this.
62

morris,

edinburgh 10/03/2008 17:40:46
70 Great Idea ,just one question .How do we finance Local government?
63

The Tin Man,

Over the Rainbow 10/03/2008 17:43:50
I fore-see massive LIT increases happening very quickly.... I entirely agree with Morris re. the council tax rebate, but what about the other £450MM black-hole?
64

The Tin Man,

Over the Rainbow 10/03/2008 17:44:51
#76 Morris

How about financing local government locally?
65

morris,

edinburgh 10/03/2008 17:49:33
78 With ?
66

The Tin Man,

Over the Rainbow 10/03/2008 17:51:28
#79 Morris

Local income tax, not central government taxation.
67

Miss H,

10/03/2008 17:56:14
80 As long as Westminster retains control that can't happen - or could only happen on a UK wide basis.

The only way for Scotland to have a LIT with councils able to set their own rates is with independence. Seeing as how we are not yet independent the choice is council tax or the SNP's proposal.

So let's vote on that one. I vote for the SNP.
68

The Tin Man,

Over the Rainbow 10/03/2008 18:03:26
#81 Miss H

Party politics aside, the Edinburgh gov is perfectly entitled to cut interest rates by 3% in Scotland. If they can abolish the council tax, surely they can introduce a local local income tax.

Independence or no independence, the Inland Revenue will still be collecting income tax, a Scottish goverment would just be paying them to do it.
69

The Master,

10/03/2008 18:11:22
#72 Miss H: I did not say that social housing is available straight away to anyone who wants it, but that it is a viable option that should be given serious consideration: if many of those who struggle to pay CT had made proper consideration of this and other options before jumping unthinkingly onto the housing ladder, then they wouldn’t be experiencing difficulties in paying CT. What is available is a ready supply of (now private) ex local authority accommodation which is often more spacious and more often than not far more affordable than the accommodation which many of those who struggle to pay CT have saddled themselves with. Like I was trying to say, many of those who struggle with CT have brought their travails on themselves, either through a lack of careful planning or through over ambition. This is not a good argument against the current system of CT.

I take your point about the difference between rural and urban areas. I do, however, find your reference to council tax benefit in urban areas operating as“a direct disincentive to work” extremely patronising and broad brushed, although at least you do go on to admit that “it is much more complex than that”. Gordon Brown “put his finger on it” after the last Scottish Elections when he said that part of the reason he was sorry to see your party take power in Scotland is that the SNP have no real concern for social justice.
70

Miss H,

10/03/2008 19:11:43
82 The Scottish Government has a statutory right to vary income tax by 3p in the pound which means that the infrastructure to do that administratively is guaranteed. However the infrastructure to apply a variable local income tax set by each local authority would require Westminster's agreement and cooperation because they control it.
71

Miss H,

10/03/2008 19:18:42
83 Master have you ever heard the phrase when you're in a hole stop digging?

You are in a hole.

There is a masssive shortage of affordable housing to rent all across Scotland. It is one of the biggest problems our country faces. Glib statements about social housing being a viable option for people who want to downsize just make you look daft.

There is nothing patronising about saying that the various strands of the benefits system act as a poverty trap and a disincentive to work. If you had actually done any reading about the subject you would be aware of that. Google it.

72

KampungHighlander,

Jakarta 10/03/2008 19:37:13
What happens to people who don't pay tax in the UK who buy a Holiday home?
73

The Tin Man,

Over the Rainbow 10/03/2008 19:46:34
#86 kampumg

If you don't pay income tax, I guess you would only pay for water & sewerage - so you should be OK :-) Unless our lords and masters intend to scrap that as well.
74

The Tin Man,

Over the Rainbow 10/03/2008 19:56:47
#84 Miss H

There is not much difference in the mechanism. The IR would have to charge a central-local income tax because you have a postcode in Scotland. A local-local income tax would be charged because you have, say, a Clackmananshire postcode. Anyway, that is what the article is about.
75

,

10/03/2008 20:02:57
Comment Removed By Administrator
Reason:
76

,

10/03/2008 20:33:17
Comment Removed By Administrator
Reason:
77

Huntly loon,

Aberdeenshire 10/03/2008 22:51:31
The Council Tax Benefit is I understand paid directly to the councils to compensate them for the Council Tax which they would otherwise have received from the properties concerned. I believe the water rates are not eligible for relief by the benefit and that the uptake of the benefit is very small because of the complexity of the form (Does it really run to 40 pages of questions?). The total Local Income Tax (even if really a centrally set single rate tax) would surely need to be of the level of the total Council Tax raised from its payers then without the 'benefit' the overall level of tax taken directly from the people would have to rise. This would seem to be totally inequitable as England would continue to have its level subsidised by central government and Scotland would not, it the equivalent of the benefit is withdrawn as stated by Mr Purnell. Surely even with LIT vis-a-vis the CT the overall take was to be the same only the breakdown in who was paying it was changing.
As for HMRC being unwilling to implement LIT would seem bizarre. It is Her Majesty's Revenue & Customs not GBRC (Gordon Brown's Revenue & Customs). Surely when the Queen gives her assent to a bill of the Holyrood Parliament introducing LIT her servants at the Revenue would be obliged to implement Her Majesty's wishes irrespective of what the Government in London says. Or is her assent to Scottish Bills of no import. If that is the case then the United Kingdom's days are really numbered if the Queen's Scottish wishes are ignored.
As regards a 3p rate the Scotland Act already permits that without further legislation. The taxation system is exceedingly complex already, a 3p Scottish rate is hardly going to be a straw with breaks the camel's back.
78

Liberal for life,

Dunblane 10/03/2008 23:18:50
# 29 - hope these help explain better, if not then I can try again later.

www.libdems.org.uk/media/documents/policies/18LocalIncomeTax.pdf

campaigns.libdems.org.uk/axethetax
79

Furchrissake,

11/03/2008 00:10:14
91# Your comments make sense to me. If the unemployed, students, pensioners etc - all without earned income do not pay the local income tax, where will the councils get the money they need?

And, since it is only earned income that is being taxed what about the wealthy who live of inherited income, investments etc? And, if they were to pay, would it still be just 3p - looks like they've got a great deal going here.

Also, which authority would get the income tax from north sea workers? Since most of the contractors are Aberdeen-based, would this go into the Aberdeen pot?

And how would the contractors work it if Aberdonians are working alongside English or Welsh-based workers. They would be working on different tax systems.

It looks to me that the large cities will benefit a lot more than rural areas, bearing in mind the salary levels - except perhaps Glasgow -

I just can't see it as fair. Either I'm just confused or there are still a lot of problems to come.

80

The Master,

11/03/2008 10:07:12
#85 Miss H: you’re the one who’s lost the plot here! The topic we’re discussing is the fairness of the current system of CT. What has the poverty of those who can’t even afford to rent any kind of property got to do with anything? They’ll struggle under LIT just as much as under CT. It was the situation of those who are far from being in extreme poverty but who struggle to pay CT that I was talking about! I was referring to those who can afford to BUY ex council properties but choose to live in more expensive properties that I was talking about. I was not talking about those who are so badly off that they can’t even afford to buy a former local authority property in an unfashionable area.
81

The Master,

11/03/2008 10:11:47
#85 I repeat: there is a ready supply of ex local authority property to BUY. I was not referring to the rental market. Any hole is of your own making, not mine!
82

The Master,

11/03/2008 10:11:59
#85 I repeat: there is a ready supply of ex local authority property to BUY. I was not referring to the rental market. Any hole is of your own making, not mine!
83

Senga Jean,

Scotland 19/03/2008 19:27:50
Sounds like Westminster picking fights with the Scottish people. For the naysayers I would ask how would they like to raise funds for local services in a FAIR manner. (Incidentally those who mention ANOTHER tax are dim or mischief making....it would be a substitute for the present UNFAIR system)

 

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