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A Fairer Local Tax for Scotland - responses

Background

This Scottish Government consultation proposes abolishing council tax in Scotland and replacing it with a local income tax.

The current Scottish Government stood for election with a stated proposal to abolish the council tax and replace it with a "fairer" local tax based on ability to pay. This consultation is the first stage of making that proposal a reality.

Proposals for a new local taxation system to fund local authority expenditure include:

• A tax free personal allowance that matches the UK personal allowance levels
• A 3% rate applied to the income that is subject to basic and higher rates of UK income tax
• Collection that complements the existing national system of collection through Pay as You Earn ( PAYE) and self assessment
• Exemptions for savings and investment income
• A tax for second homes, which will be subject to local requirements, and broadly comparable to the current council tax on second homes.

The Scottish Government want to deliver these reforms as quickly as possible and within the term of the current Scottish Parliament.

Responses

The deadline for responses was Friday July 18 2008.

Low Incomes Tax Reform Group

The low incomes tax reform group , in its response is concerned over the lack of clarity in the proposals relating to the administration and collection of the tax.

"We also have specific concerns for the vulnerable. For example, how does any new system recognise the exemptions and discounts that are already inherent in the council tax? This is very relevant, for example, for people with disabilities."

The Law Society of Scotland

The Law Society of Scotland has concerns about the following:

• whether the proposals outlined in the consultation paper constitute a local tax and therefore whether the Scottish Government has the constitutional authority to implement such a system
• whether HM Revenue and Customs (HMRC) are willing or able to collect the tax (if they are, changes to UK legislation would be required)
• the effect of such a tax on those with low incomes
• the effect on families receiving tax credits
• the difficulty of introducing discounts and exemptions into the scheme
• the effect on disabled taxpayers in employment

You can view these response from the links below.

More information

• councils support local income tax - BBC website
• a fairer local tax for scotland - link to consultation
• press release
• responses

1. institute of revenues, rating and valuation
2. the law society of scotland
3. low incomes tax reform group
4. moray council (pdf file)
5. scottish chambers of commerce (pdf file)

Note: for pdf files you will need to download adobe acrobat reader. To convert the pdf to alternative formats or for more information on accessibility go to access adobe.

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