Local income tax will undo economy efforts – claim

SNP marches onwards with plan despite widespread opposition from business

By Tim Pauling

Published:

The Scottish Government is pressing ahead with plans for a local income tax in the face of widespread opposition from business leaders.

Ministers claimed popular backing for the proposals yesterday as they published the results of a consultation on the idea.

The release of the document led to accusations that the SNP had tried to “sneak out” the document under cover of the chancellor’s pre-Budget report.

According to the analysis of the public consultation, 55% of the 430 individuals who responded thought the local income tax (LIT) was the fairest form of taxation, with 25% in favour of the council tax.

The paper failed to include any breakdown on the 86 responses from organisations. But it did show serious misgivings among businesses, professional organisations and charities.

Business leaders launched a fresh attack on the government’s plans, claiming they would hit efforts to revitalise the economy.

Scottish Chambers of Commerce chief executive Liz Cameron said it was “extremely disappointing” that the government was pressing ahead with legislation without addressing the widespread concerns among the business community.

“At a time when the country is facing a looming recession, the Scottish Government needs to focus its efforts on supporting businesses and sustaining employment,” she said.

“A local income tax would have a direct cost to business in terms of its administration and would make Scotland a less attractive place in which to invest and do business.

“That is the very opposite of what we need at this time.”

CBI Scotland assistant director David Lonsdale said: “Our members remain wholly opposed to a local income tax as it would mean a costly extra administrative burden for firms operating in Scotland, particularly in those sectors which traditionally have a high staff turnover such as tourism, hospitality and retail.”

Tory finance spokesman Derek Brownlee said the more detail that become available on the LIT, the less people liked it.

“It’s not clear if Alex Salmond thinks that today is a good day to bury bad news or if he feels the need to compete with Gordon Brown with his very own tax con,” he said.

Labour finance spokesman Andy Kerr said to release the report just before the pre-Budget statement showed the SNP lacked confidence in their own policy.

“Their new tax is an attack on jobs which will drive high-earners out of Scotland and ensure we are unable to attract corporate headquarters,” he said.

Just 10 organisations supported LIT, he said and, due to lack of detail, most could not comment on questions asked in the document.

“This explains why the consultation concentrates so much on individuals,” Mr Kerr said.

“Less than 500 people replied. The Scottish Government's own civil servants have warned that no conclusion can be drawn from so few replies, no matter what sort of a gloss the SNP try and put on it.”

He added that Alex Salmond can no longer boast that 80% of Scots support it. Of the 55% in favour, just 34% of the 34-54 age group – the largest section of the population in work – were in favour.

Finance Secretary John Swinney said the report showed Scots up and down the country supported the LIT plan.

“I am pleased that the majority of respondents to the consultation agree that a local income tax, based on ability to pay, is a fair tax,” he said.

“The Scottish Parliament has twice agreed that council tax is now discredited, and there is now a clear momentum behind our plans. We will publish a bill to abolish council tax in this parliamentary year.”