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Local Income Tax
24/11/2008
A majority of Scots think a local income tax is the fairest form of taxation.
Of the individuals who responded to the consultation, 55 per cent thought a local income tax, based on the ability to pay, was the fairest way to raise money to pay for local services.
The Scottish Government has today published an analysis of the consultation which finds:
- 55 per cent of individuals thought the local income tax was the fairest form of taxation, with just 25 per cent in favour of the council tax
- 57 per cent of individuals supported a nationally set rate
- 62 per cent of people felt the tax should be collected at source
- 60 per cent of individuals and organisations supported collection by HM Revenue and Customs
- A majority of individuals and organisations thought Scotland should retain money equivalent to the council tax benefit
Cabinet Secretary for Finance and Sustainable Growth John Swinney said:
"The council tax has to go. The Scottish Parliament agrees and now this is welcome evidence that Scots up and down the country agree.
"Abolishing the discredited and unpopular council tax in favour of a fair, 3 pence local income tax will be the biggest tax cut in a generation and put money in people's pockets. In the current economic climate, that will be widely welcomed, giving between £300 and £480 a year back to low and middle income households. A local income tax would lift 90,000 people in Scotland, including 10,000 children, out of relative poverty.
"With this Government's plans, four out of five households will be better or no worse off. I am pleased that the majority of respondents to the consultation agree that a local income tax, based on ability to pay, is a fair tax.
"We are determined to introduce a system of local taxation to share the cost of public services more fairly. The Scottish Parliament has twice agreed that council tax is now discredited, and there is now a clear momentum behind our plans.
"We will publish a Bill to abolish council tax in this Parliamentary year. We are currently analysing a further number of issues, including the position of full time students, second homes, possibly applying the tax to dividend income and options for local variability of the tax rate in a downward direction.
"Prior to introducing a Bill, we will outline further proposals in these areas and publish a financial memorandum and regulatory impact assessment.
"I now call on every member of the Scottish Parliament to benefit millions of Scots by working with us to scrap the unfair council tax and make Scotland the lowest locally taxed part of the UK.
"Until local income tax is introduced, we will continue to work with local government to freeze the council tax to offer hard pressed individuals and families some respite from rising bills."
The consultation ran between March and July 2008.
Since May 2007, Parliament has agreed the following three motions:
October 2 2008 - "That the Parliament calls on the Scottish Government to publish in detail, prior to the introduction of a council tax abolition Bill, how it proposes to allocate to each local authority local income tax revenues and all other sources of funding, including revenue support grant and non-domestic rates income, together with indicative figures for each local authority for the first year of operation of local income tax, and how stability of funding is delivered to ensure that no local authority loses revenues directly because of the introduction of the new tax system in the event of the Bill being enacted, and believes the UK Government should agree that Council Tax Benefit money forms an integral part of local government finance and should be available to local government as part of decisions by the Scottish Parliament to reform local taxation in Scotland."
April 17 2008 - "That the Parliament notes the Scottish Government's consultation on the future of local taxation; recognises that this consultation is not due to close until 18 July 2008; notes the wider range of possible options, including local income tax, land value tax, property tax and reform of the council tax; recognises that the existing system of local government taxation is discredited, bureaucratic and unpopular; agrees on the urgent need for substantial changes to the system of local taxation, and agrees that, in developing this future system, due consideration should be given to fairness, local accountability, the need to reduce tax avoidance and the wider social, economic and environmental impact of any proposed system of local tax reform on communities across Scotland."
21 June 2007 - "That the Parliament believes that local income tax, which is based on ability to pay, is a fairer system of local taxation than the discredited and unfair council tax and notes the position of the Green Party in regard to land value taxation."