An outline of the proposals
The Scottish Government believes that the Scottish people have the right to change the way local authorities are funded from local taxation and also to change the nature of that local taxation. That is why the current Government stood for election with a clearly stated proposal to abolish the council tax and replace it with a fairer local tax based on ability to pay. This consultation is the first part of making that proposal a reality, and we are asking for your views. Our proposals for a new local taxation system to fund local authority expenditure include:
- A tax free personal allowance that matches the UK personal allowance levels
- A 3% rate applied to the income that is subject to basic and higher rates of UK income tax
- Collection that complements the existing national system of collection through Pay as You Earn (PAYE) and self assessment
- Exemptions for savings and investment income
- A tax for second homes, which will be subject to local requirements, and broadly comparable to the current council tax on second homes.
We will seek UK Government cooperation in administering a local income tax. We want to deliver these reforms as quickly as possible and within the term of the current Scottish Parliament. This will be a challenging task, but with the cooperation of the UK Government, we can achieve the implementation of the proposals outlined in this consultation document.