14 March 2007

It's not very convincing, to say the least

This morning the BBC reported that the SNP's local income tax proposals would involve a standard across-the-board charge of 3p in the pound with no local variation. I thought that the BBC must have got it wrong: nobody could be that stupid. So I decided to withhold comment.

But it has now appeared on the SNP website (here):
The SNP will abolish the unfair Council Tax and replace it with a local income tax system based on the ability to pay. The local tax will be set at a rate of 3p on income excluding savings income.
Thus, at a stroke, the SNP would abolish the ability of local authorities to determine their income. Admittedly, council tax income represents a relatively small proportion of the total income of local authorities but it is important at the margin. Because if local authorities have no control over their income (as the SNP now propose), they have no control over the level of services provided in their area - everything is determined centrally. Thus local authorities become spending agencies on behalf of central government.

I could go further. If local authority income is determined centrally (as the SNP now propose), why bother with a local income tax? If local resources are both determined centrally and handed down by central government, why bother going through the hassle of determining the amounts payable by individuals in local authority areas, only to equalise the disparities through what used to be known as rate support grant? In simple terms, why give Edinburgh less in grant than Borders because the former gets more per head in local income tax, when it all comes from the same source? Just determine local authority needs on an objective basis and give them the money.

Some other points to note, courtesy of an illiterate Frequently Asked Questions (here):
Individuals will pay local income tax through HM Revenues and Customs and this will be distributed to local authorities.
No sign that the SNP has actually spoken to HMRC about how easy it would be to determine the amounts of local income tax payable to individual local authorities. Nor is there any answer to the question of whether it is the address of the employer or the employee which matters.
Owners of second homes would pay their fair share. They would pay an equivalent amount in business rates.
So, on top of the 3% of their income, second home owners would pay business rates on their second home. And how would that be assessed, exactly?

And finally, there is this curious addition to the very first quotation set out above:
The local tax will be set at a rate of 3p on income excluding savings income.
Strange that the SNP should want unearned income excluded from local income tax. Does Mr Salmon or Ms Sturgeon have lots of shares hidden away? Why should a retired millionaire living off his bank interest be excused local income tax? And, anyway, as HMRC calculates income tax liabilities on the basis of total income, would it even be possible?

As a member of the electorate, I think that I deserve a better plan for local government finance than this back of a fag packet rubbish.

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