Scottish government seeks council tax abolition

The Scottish government’s proposed abolition of council tax will be the biggest shake-up of taxation north of the border in decades, it has been claimed.

Finance secretary John Swinney began a consultation on its replacement with a local income tax yesterday by pointing out more than four out of five households will be better off or the same under the government’s plans.

Pensioners, couples without children and single-parent households will receive the biggest benefits from the deal, he says.

The four-month consultation proposes a three per cent rate of tax applied to income already subject to UK income tax, with exemptions for savings and investment income.

“This reform is designed to offer most help to those on low and middle incomes and represents the biggest tax cut for a generation,” Mr Swinney said.

“The council tax is unfair, regressive and penalises people on low incomes. The people of Scotland will be better off paying a fairer, local income tax, based solely on the ability to pay.”

The Scottish Labour party attacked the proposed measures, saying they would make Scots the highest-taxed in the UK and result in inflated house prices.

Holyrood’s Labour leader Wendy Alexander said the proposed 3p rate would not prove sufficient as it would only cover half the amount services are provided with by local authorities.

And she described the Scottish National party’s (SNP) consultation document as having “more holes in it than a piece of Swiss cheese”.

“No matter what spin the SNP put on their plans, the fact is it is an ill-thought out and unworkable Scottish jobs tax,” she said.

Liberal Democrat finance spokesperson Tavish Scott attacked Ms Alexander, saying he was “staggered” by her comments which resembled those of “anti-government right-wingers”.

Although supporting the switch to a local income tax he insisted the Lib Dems held differences with the SNP over whether government or local councils should set the rate, however.

Mr Scott added: “These are the issues which need to be discussed if we are to build a parliamentary majority in favour of change and overcome the Labour and Tory supporters of council tax.”