Wednesday, 9 April 2008

Taxing questions for the Gnats

Apparently the Treasury is arguing that the SNP minority government in Scotland doesn't have the power to introduce a centrally-set "local" income tax to replace the council tax.

To my mind this is just nonsense: the Scotland Act does explicitly give the Scottish Parliament the right to legislate for local government taxation.

I think the Treasury, and the Labour government generally at Westminster, does itself no favours by coming out with these statements. It is looking like a big bully and is playing into the Gnats' hand by storing up resentments against its bull in a china shop approach to dealing with the devolved administration.

But let's assume for a moment that the Treasury is correct and that having a nationally-set income tax to fund local government does fall outside the definition of local taxation. Does that mean that the Gnats would have no power to introduce such a system?

Well, no. As the Treasury is well aware, the Scottish Parliament has the power to vary income tax up or down by 3p in the pound, which is in effect what the Gnats are proposing with their nationally-set income tax for local government.

But this little spat also shows up the biggest problem with the Gnats' plans: the complete disregard they have for local accountability and democracy. Deciding the rate at which taxes are levied for local government in Edinburgh removes any local control over finance. That is simply unacceptable.

There is a way out for the Gnats: adopt the Scottish Lib Dem policy of allowing local authorities to set their own rate of local income tax. That way they avoid the Treasury objections and maintain local accountability. If the Gnats fail to do so, they will not only face continued wrangling with Westminster, they are also unlikely to get their plans through at Holyrood. And that would mean that the unfair council tax would survive.

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