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CHAPTER THIRTEEN: SUMMARY
CONCLUSIONS
13.1 A wide range of organisations and individuals responded to this consultation. Across these responses there were some differences between opinions voiced by individuals and those expressed by organisations.
Personal allowances
13.2 Over half of both individuals and organisations voiced support for the local income tax personal allowance staying the same as the UK income tax personal allowance; 56% of individuals were in favour of this proposal while the main comment identified in 44 out of the 86 organisational responses was that the level should remain the same.
3p tax rate
13.3 Around half of individuals (49%) thought a 3p tax rate about right; 16 organisations gave a direct answer on the proposed 3p rate and their opinion was split; 8 felt it would be too low while 7 thought it about right. In 30 organisational responses the main theme to emerge was that a 3% rate would result in a shortfall or funding gap.
Tax and public services
13.4 Few individuals would be willing to pay more income tax to provide for better quality public services, over half (59%) of individual respondents said that they would not pay more while 30% said that they would. Only a small number of organisations commented on this issue as they felt it was a question for individuals.
National versus local rate
13.5 The majority (57%) of individuals supported a nationally set tax rate while just over a third (34%) wanted a locally set level. Of the 25 organisations giving an answer on this subject, the majority (16) wanted the rate to be set locally while 9 said nationally.
- Of those individuals who answered 'locally', 70% felt that Scottish Ministers should be able to cap the rate.
Taxation on earned and unearned income
13.6 Over three-quarters of individual respondents (79%) wanted to see tax levied on earned income with almost as many (72%) in favour of tax on income from second homes. Individuals were split on whether pensions (48% in favour) or financial investments (47% in favour) should be taxed. Thirty percent supported tax on savings. The main theme to emerge across organisations who commented on this area of the consultation was that all forms of income should be taxed.
Exemptions and discounts
13.7 Half (50%) of the individuals responding did not see the need for any exemptions or discounts while 31% felt that there should be. Organisations mentioned various groups who, they felt, should be eligible for discounts or exemptions and these included students (mentioned by 8 organisations); Scottish families receiving tax credits (5 organisations); older people/ pensioners (3 organisations).
- Those individuals who indicated that there should be exemptions or discounts were then asked who these should apply to and how this should be funded. The top three groups mentioned were; pensioners (24% of those individuals who felt there should be discounts); disabled/ those with long term illness (15%); low paid/ low income/ low earners (13%).
- Ideas for funding exemptions or discounts included adjusting local income tax rates (6% of those individuals who felt there should be discounts); applying local income tax to other areas (4%); more tax on those with higher incomes (4%).
Definition of a Scottish taxpayer
13.8 The majority of individual respondents were in favour (64%) of retaining the definition of a Scottish taxpayer already contained in the Scotland Act. There was widespread agreement amongst organisations who dealt with this issue in their responses that this definition is suitable, although there were some concerns including the possible avoidance of local income tax.
Transitional arrangements
13.9 The majority of individuals (55%) did not see the need for transitional arrangements and 15% said that there should be. Of the 22 organisations giving a direct response, 17 said there should not be transitional arrangements while 5 felt that there should be; responses from organisations providing commentary on this issue showed polarised views with 7 in favour and 8 against transitional arrangements.
Collection of a local income tax
13.10 HMRC was the preferred choice to collect a local income tax; both the majority of individuals (60%) and those organisations providing a direct answer (27 out of 30) supported collection by HMRC. Responses from 21 organisations who commented more fully on this question also indicated their agreement that HMRC should be responsible for collecting local income tax.
13.11 The majority of individuals (62%) felt local income tax should be collected at source and 26 organisations who commented on this issue agreed; 21 organisations indicated support for a combination of collection at source and payment.
Support for employers
13.12 At least half of individual respondents felt advice for employers should include an information booklet for employers (69%), a website with a section of frequently asked questions (63%) and a designated advice hotline (56%). The most frequent comment from organisations was that all of the suggested methods of support would be necessary to support employers in implementing the proposals.
Economic benefits
13.13 When asked whether the introduction of a local income tax would have positive economic benefits for Scotland, there was a fairly even split amongst individuals with 42% saying no and 44% yes. Twelve organisations gave a direct answer to this question; 5 said that it would have positive economic impacts, while 7 felt it would not. There was some concern from organisations, especially over the possibility of tax migration, with 18 organisations commenting on the possibility of a local income tax encouraging people to leave Scotland.
Living and working in Scotland
13.14 More than half (56%) of the individual respondents said that the tax rate would influence their decision to live in Scotland to some extent; 43% said that it would not influence them at all. Few organisations gave a direct response as this was seen as a question primarily for individuals; of the 11 organisations answering, 3 said it would affect their decision 'a lot', 2 said 'a little' while 6 said 'not at all'. In addition, 20 organisations provided comments around this subject; the main focus of discussion was that Scotland could become a less attractive place to locate a business, employ, or be employed.
13.15 When asked whether the introduction of a local income tax would have an impact on their work patterns, almost half (42%) of individuals said that it would not; a fairly high percentage (29%) did not give an answer. Again, few organisations commented on this issue.
Local accountability
13.16 Almost half (48%) of individual respondents did not see the need for local authorities to have the power to set a tax, whereas 17 out of the 23 organisations who answered directly were in favour of this proposal. Thirteen other organisations commented on this issue; their responses indicated support for local authorities to have the power to set a tax.
13.17 There were few comments from either individuals or organisations on accountability and democracy. The main theme to emerge from individual responses on the subject of accountability and democracy was a general agreement that there should be local accountability (13%); 10% mentioned a negative experience of local authorities handling tax or finance matters. Organisations wishing to comment on this issue had already done so in relation to the previous questions on setting a tax.
Equality
13.18 There were few comments from either individuals or organisations on equality issues. The main issue identified in responses from individuals was agreement with the proposals which are seen as fair (5%).
Distribution
13.19 Both individuals (41%) and organisations (9 out of the 12 who gave a direct answer) felt money raised through a local income tax should be distributed to local authorities based on need as opposed to population or the amount of local income tax raised in each area.
Council tax benefit
13.20 The majority of both individuals (51%) and organisations (8 out of the 14 who provided a direct answer) agreed that Scotland should retain monies equivalent to council tax benefit. Twenty-two percent of individuals disagreed as did 4 of the 14 organisations. Comments from 13 other organisations also showed agreement with this proposal and it was suggested by these organisations that negotiation between the Scottish Government and the UK Government is essential for these issues to be resolved.
A second homes tax
13.21 The majority of both individuals (51%) and organisations (21 out of 23 who answered this question) agreed to some extent that local authorities should play a part in setting a second home tax; although there was some concern from organisations over how second homes would be identified.
13.22 Slightly more individuals (36%) were in favour of tax on second or empty homes being collected by HMRC than collection by local authorities (34%). Organisations favoured collection by local authorities; in total we identified comments from 34 organisations supporting collection by local authorities.
Fairest approach to taxation
13.23 Over half (55%) of individual respondents saw local income tax as the fairest approach to taxation, 25% felt that council tax was the fairest approach. Organisations tended to discuss the merits or drawbacks of each method of taxation; of the 16 who gave direct responses, 10 voiced support for a local income tax and 5 supported council tax.
13.24 Many organisations provided comments in free-flowing format and while many organisations voiced their views on local income tax, in many cases it was not always obvious whether they supported or opposed proposals. In these cases respondents presented both viewpoints e.g. their assessment of the positive and negative aspects of the suggested approaches to taxation.
Provision of a wealthier Scotland
13.25 Forty percent of individuals thought that a local income tax would provide a wealthier Scotland; 21% said council tax. Few organisations commented on this issue; of the 9 organisations who gave a direct answer to the consultation question on which approach would provide a more wealthy Scotland, 7 specified a local income tax while 2 chose council tax
Most significant factor
13.26 Finally, respondents were asked "If a local income tax is introduced, what would be the most significant factor (good or bad) for you?" Forty-one percent of individuals answered that a local income tax would be fairer than council tax; just over a quarter (27%) said that they or their household would be worse off under a local income tax. The key theme to emerge from organisational responses was that more information and specific details would be required before a decision could be reached.
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