Thursday, 4 September 2008

Local Income Tax - A Disincentive To Work Hard And Do Well!

The SNP's proposed abolition of Council Tax to be replaced by a Local Income Tax is quite simply another disincentive to work hard and do well.

No one likes paying tax, unless they have to, but today's proposal by the Scottish Executive to pay for local services based on a supposed ability to pay means that, for the same Council services, two households beside one another might be faced with one paying nothing for their bins to be picked up, their streets to be lit and their libraries to be open while their next door neighbours pay £3,000 a year to receive the exact same services, based on a combined household income of £100,000.

And this of course assumes that the 3 pence in the every pound level mooted by the SNP is actually sustainable. Glasgow City Council calculates that at 3% a Local Income Tax would leave them with a shortfall of £133 million on current budgets - in other words to maintain current expenditure Local Income Tax would have to increase by 50% to 4.5%. Here, in East Renfrewshire, I believe that with our extremely high percentage of population that is either old or young our expenditure, in what is a relatively small local authority, is pretty big per head of population and we too would have to seek to raise the level of Local Income Tax just to be able to maintain the standard of our schools and other services.

And whenever you raise a tax on a regional basis you also find a large number of people who seek to avoid paying that tax. For example, with Corporation Tax in the UK higher than that in the Republic of Ireland a number of large companies have moved their head offices from London to Dublin to take advantage of the tax break this provides. In the case of Local Income Tax, I wonder how many people will register for tax purposes in England, Wales or Northern Ireland to avoid paying a Scottish Local Income Tax were it to be introduced.

In summary, the SNP's Local Income Tax proposal is poorly thought through, will lead to inequities in payment for local services in local communities and will undoubtedly not be paid by those who can afford to find ways of avoiding it. All this would be damaging to the social cohesion of Scotland and potential ruinous to our economy. That is why we must all oppose its introduction and leave no stone unturned until it is consigned to the political scrapheap.

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