Families would be hit hard by Local Income Tax
Commenting on proposals for Local Income Tax, Cathy Peattie said:
"Local Income Tax may seem a fair way of funding local government,
but closer scrutiny reveals big problems and makes it much less attractive.
The Burt review into local government finance calculated that in order
to maintain spending on services at current levels, there would have to
be a local income tax rate in the region of 6.5p in the pound. The Liberals
accepted this, but the SNP proposed a 3p in the pound cap without saying
how they would address the funding shortfall. And it is a huge shortfall
- there would need to be a £1bn reduction in local authority budgets.
That would mean very severe cuts in public services.
"If the rate were 6.5p, then many families would be hit hard. For
example, take a nurse and a fireman, with a combined income of £45,600.
They would pay about £2030 in local income tax. That's almost double
what they would be paying this year in a band D property in the Falkirk
Council area.
"There are lots of others who will be worse off, but of course there
will be some winners. These include property owners who live abroad or
elsewhere in the UK. They won't pay local income tax. But they do pay
Council Tax.
"This leaves the SNP somewhere between a rock and a hard place -
the best outcome for them would be if their proposals are blocked, so
that they can escape the problems of implementation and blame others for
it not happening.
"Personally, I recognise that Council Tax is not ideal, but I think
that property taxes do have some significant advantages. On balance, I
would prefer to see Council Tax reformed, with an improved rebate system
that takes better account of people's ability to pay and other personal
circumstances."
(June 2007)
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