The referendum on the creation of a Scottish parliament posed two separate questions to the electorate: did we want a parliament; and if so, did we want it to have tax-varying powers? The result was an overwhelming yes to the first question, and a very definite yes to the second.
More than a decade on and we’ve yet to exercise those powers, well, business taxes, yes, but the rate of income tax, no.
Now the SNP are proposing to abolish council tax and introduce a system of local income tax, so called, but in reality set centrally at a single national level.
The system would exclude taxation on savings and other unearned income, meaning that the rich wouldn’t pay, but the low-earning poor would be expected to pick up the slack.
It is estimated that the new system, if levied at the three pence in the pound touted by the SNP, would leave a £750 million hole in Scotland’s finances, leading to massive cuts in public services across the board.
Currently, Scotland as a whole receives around £400 million in council tax rebate from Westminster. However, if there is no council tax, there can clearly be no council tax rebate. Alex Salmond has attempted to portray this as an attempt by the UK government to withhold cash from Scotland, however, currently it is straightforward to calculate how much council tax would be raised if those who are exempt were not. Under the new system, the SNP would be asking Westminster to calculate how much revenue would be generated if those who are economically inactive were earning an unspecified income, or those who are on low incomes were earning more. This is not possible.
The SNP claim that the new system can be collected through PAYE, and thereby, Revenue and Customs. Not only would this substantially increase the burden on small businesses in particular, it is also open to speculation as to whether Revenue and Customs will agree to take on this additional task, and if so, how much they will charge for this service.
If this tax is to collected through the workplace, not the home, significant numbers of people in the Borders, who live in England, but work in Scotland, will run the risk of being taxed for services which they do not access.
These services, at present, are run by the local authorities, and paid for through a mixture of cash from the Scottish government and revenue raised by the local authorities. This allows them the power to vary the rate of council tax according to their circumstances and the priorities of the inhabitants of the local area.
I live in Glasgow. Our council tax is higher than in many other local authorities and I’m happy to pay it. We have heavily subsidised leisure centres, great museums and galleries and a Labour administration who are making a huge investment in modern apprenticeships across the city. Under the SNP’s plans, local income tax will be capped at three pence in the pound, making it impossible for local authorities like Glasgow to raise revenue and fund schemes that are so vital in addressing the health and employment issues that have dogged the city for generations.
The local income tax is not about redistribution, it’s just another example of the SNP attempting to pick a fight with Westminster at the expense of the Scottish people. An exercise in shallow rhetoric and political grandstanding with serious consequences for our public services and our economy.