Council Tax

– in the Scottish Parliament at 10:43 am on 11th March 2004.

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Photo of Murray Tosh Murray Tosh Conservative 10:43 am, 11th March 2004

The next item of business is a debate on motion S2M-984, in the name of Tommy Sheridan, on the council tax, and one amendment to the motion.

Photo of Tommy Sheridan Tommy Sheridan SSP 10:48 am, 11th March 2004

It is right and fitting to debate such important issues in the chamber this morning. We have just debated pensioner poverty and the scandal of winter cold-related deaths. We will now debate the council tax and the just case of Scotland's nursery nurses, about which my colleagues Frances Curran and Carolyn Leckie will say more. I simply say that it is a fact of life that the majority of poor pensioners are women. That is because women have been low paid for longer in their lives. Scotland's nursery nurse work force predominantly consists of women. They are fighting the scandal of low pay and deserve 100 per cent support from the people of Scotland.

Another major factor that contributes to pensioner poverty is the unfair Tory council tax, which, in the past 10 years, has increased by 80 per cent. The council tax was introduced as a knee-jerk measure by the last Tory Government to try to save its skin after the poll tax rebellion. Ten years on, we have a tax that pampers the well paid and the wealthy, but punishes the pensioner household and the ordinary worker. The company director whose income is 100 times that of one of his employees will only pay a maximum of three times more in council tax. Millions of households throughout Scotland—particularly pensioner households, but also working households—can now hardly afford to pay the rising council tax bills. They are having to sacrifice other items, such as holidays, clothes and decorating their homes; because of the council tax, families are having to sacrifice things that many of us take for granted.

Today's debate is not about alternatives to the council tax. In that respect, I applaud the Scottish National Party for not lodging an amendment to the motion. We in the Scottish Socialist Party have our proposal, the Lib Dems have their proposal, the SNP has its proposal and the Greens have their proposal. There is no doubt that there is time and a need to debate the alternatives. We believe in an income-based alternative. Whether our scheme is better than those of the Lib Dems or the SNP, time will tell, but today's debate is about whether members agree that the council tax should be scrapped. We are asking members today to agree that the council tax should be replaced with an income-based alternative, not that it should be replaced with any particular income-based alternative. I expect the Tory party to vote to defend its scheme, which is unfair and which punishes pensioners and the ordinary worker.

Photo of Elaine Smith Elaine Smith Labour

Does Tommy Sheridan agree that a parliament is differentiated from an assembly by its ability to raise finance? Of course we could use the 3p tax-varying power to fund things such as free school meals, but that power is a blunt instrument. Income-based local taxation would ensure that there is progressive taxation and redistribution and it would allow the real problems of poverty and deprivation to be tackled. However, does he welcome the review that has been called for, to which we can all submit our comments?

Photo of Tommy Sheridan Tommy Sheridan SSP

I welcome both those points. First, I welcome the fact that it is recognised that with an income-based tax we will redistribute wealth in Scotland—we will tax the wealthy and the well paid more and the pensioner and the ordinary worker less. Secondly, I welcome the idea of a local government finance review. The only problem is that, nine months after the commitment was made, we still do not have the review.

The people of Scotland can wait no longer, which is why we are asking members today to unite around the single issue that the council tax should go. Let us contribute to the review as it takes place, but let us at least unite today to ditch the Tory council tax and send some relief to Scotland's millions of pensioners and ordinary workers.

I move,

That the Parliament agrees that the council tax should be abolished and replaced with an income-based alternative.

Photo of Tavish Scott Tavish Scott Liberal Democrat 10:53 am, 11th March 2004

I move amendment S2M-984.2, to leave out from "council tax" to end and insert:

"forthcoming independent review of local government finance should be asked to conduct a thorough examination of a range of local taxation systems, including the various proposals for an income-based system and reforms to the present council tax system and encourages all those who wish to make meaningful contribution to the review to submit proposals when called upon to do so."

Photo of Fergus Ewing Fergus Ewing Scottish National Party 10:54 am, 11th March 2004

During the election, I well remember seeing some SSP posters displayed on the odd lamppost around the place. Those posters did not say, "Vote SSP for our service tax." They said, "Scrap the council tax." I may be wrong, but I do not think that even the Conservatives at the last election had a manifesto of cutting taxes so, in effect, they were outflanked on the right by Mr Sheridan and his comrades, who made—

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Not just yet. [ Interruption. ] I accept that I am not as far to the right as Tony Blair.

Mr Sheridan and his comrades made their plea not on the basis of their proposals, but to arouse the instincts of people who want to pay less tax. That was a revealing campaigning technique by the SSP during the election.

The SNP has produced a set of proposals that serious commentators in the press have acknowledged as well thought out and detailed. They are based on a fundamental principle that local government taxation should be based on the ability to pay.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Too early, Iain. I have just started.

Our proposals, which are set out in a paper, are based on replacing the council tax with a local income tax. They would bring an end to the situation where pensioners are paying up to 25 per cent of their net available income on the council tax. In some cases, that means bills of £2,500 a year. Surely we must all recognise that the current system, which is based on property valuations, is unfair. We must recognise that the valuation of one's house is not the same thing as one's ability to pay. We must also recognise that the valuations for the council tax were carried out in 1991, which is 13 years ago, and that there should be a revaluation. If the Labour Party and its friends in the Conservative party, who are thirled to the council tax, believe that the current system should continue, they must acknowledge that there will be a revaluation.

Photo of Christine May Christine May Labour

Is Fergus Ewing therefore making the case for us that, in the proposed review, the valuation bands should be examined and their scope perhaps broadened? Is he saying that, basically, the valuations that were made under the old rates system should be reintroduced?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Not in the slightest. If there is to be a revaluation, a house in Leith, for example, that is currently in band B would, because of the increase in property prices, go up to band D or E. That would mean a further increase of around 40 per cent for people who might be on low incomes.

Let us face it: the days of the council tax are over. We saw the days of the Conservative Government come to an end because of its unfair poll tax. I believe—and it is the view of my party—that the days of the Labour Party in government will come to an end because of its unfair council tax.

We have produced proposals on which no one has laid a glove. Our proposals recognise, for example, that the Chartered Institute of Public Finance and Accountancy has concluded that a local income tax would be fairer and easier to administer. I look forward to the campaign ahead. I am confident that our proposals will gain massive support among the people of Scotland, who consider that the council tax is inherently unfair.

Photo of Brian Monteith Brian Monteith Conservative 10:58 am, 11th March 2004

I will cut to the chase: there is absolutely no doubt that the council tax is becoming more unpopular in Scotland almost daily, or certainly every spring, when council tax rates are set. We must ask why that is so. I propose that it is because council tax increases have been so great.

Simply to allege that the council tax is unfair and that all other forms of taxation can be fairer is to fail to see what we need to do to ensure that local authorities have adequate resources to deliver crucial public services. We need to recall that 80 per cent of council spending is funded from general taxation, which is based on income tax and consumption taxes, such as VAT and duties. Under those taxes, people who are earning high salaries make significant contributions—often greater contributions as a percentage or in real terms. Therefore, to suggest that only by replacing the council tax with yet another income-based tax will we solve the problem is entirely misleading.

An income-based tax could mean that a group of people would not have to pay a contribution to local services, even though those people might be capital rich and asset wealthy. Surely those people, who use libraries, local theatres, social work services and other amenities that are funded by local authorities, should make a contribution.

The answer lies in making the council tax far fairer than it is at present. I welcome the suggestion in the minister's amendment of a review. Of course we should have a review to ensure that the council tax is applied fairly. However, to suggest that some form of income-based tax might be a solution is seriously to mislead people.

The SNP's proposal is flawed. There is no doubt that the Parliament has powers to vary income tax, to abolish council tax and to be responsible for local authority funding, but whether the Parliament has the powers to vary income tax at more or less than 3p in the basic rate remains to be seen. The SNP seeks to turn the council tax issue into yet another constitutional question.

In the past, the SNP has been a great supporter of the removal of the 50 per cent discount on second homes. Where does that suggestion lie in relation to the introduction of a local income tax? Owners of such properties may live outside the local authority area and perhaps even outside Scotland. The argument is that the holidaymakers or second-home owners use services, but how will those people contribute to local services if they cannot be taxed through the local income tax?

As well as the suggestion that a local income tax would be fair, it is argued that we need economic growth. Economic growth must be generated by small businesses and self-employed people. However, under such a tax—unlike under a corporation tax—those people would be penalised more unfairly than the large corporations would be. There are serious flaws in the suggested replacements for the council tax. We support a review and we will support the amendment.

Photo of Christine May Christine May Labour 11:02 am, 11th March 2004

It is a truth universally acknowledged that the ability to tax and please is not given to men, or in my case, to women. Nobody likes paying tax.

Any local tax system must have four key elements for success. It must be visible—people should be able to see what they are paying for. It must be accountable and as fair as possible—I think that Lord Camden said that taxation and representation are inseparable. It must be as simple as possible to administer and collect. Finally, it must be difficult to avoid and it must produce as much revenue as possible for services.

A property-based tax is almost impossible to avoid. I find it strange that those members on the benches opposite who claim to be socialists are against a tax on property. Council tax collection rates are more than 90 per cent and rising. In my authority, the figure is more than 97 per cent and the target for next year is 98 per cent, which is as near to full payment as possible.

Photo of Christine May Christine May Labour

I am very tight for time.

The proposal is a complicated, difficult-to-administer and easy-to-avoid tax that will not provide the link with local elected representatives.

Photo of Christine May Christine May Labour

No, I am going to finish my point.

The proposed tax would be ducked by the wealthy, who could find a way round it; it would hit working families on lower wages harder than the council tax does; it would put at risk the £300 million in council tax benefit that the Department for Work and Pensions currently pays; and it would be a nightmare to administer.

I invite members to think for a moment about a small firm in the Levenmouth area of my constituency, which might employ folk from Fife, Perth and Kinross, Angus and Clackmannanshire. As that firm does not have a computerised payroll system, it would have to identify any local income tax or Scottish service tax separately from other taxation elements. What sort of burden would that produce? What difference might that make to the company's viability? How would such a system endear local government to those who were affected?

I do not agree with Tommy Sheridan that the council tax should be abolished. However, I agree that all parties should support the proposals for the review of the current system, including the consideration of alternatives, but also the consideration of widening council tax bands to take account of the rise in house prices. The trouble with Tommy's Trots is that they are deceitful as well as populist. To pretend that there is a fairy at the bottom of a mythical garden in every locality who will happily pay so that everybody else does not have to is a despicable myth. The problem is that, with those who currently pay for local services through the council tax—as with those who buy lottery tickets—credulity is always in fashion. They want to believe Tommy Sheridan, but he is deceiving them. He is despicable.

Photo of Murray Tosh Murray Tosh Conservative

The member might reflect on that last comment.

Photo of Christine May Christine May Labour

I am happy to withdraw that remark.

Photo of Murray Tosh Murray Tosh Conservative

That is appropriate.

I regret to inform the four members who had hoped to take part in the open debate that I must now go to Tavish Scott's winding-up speech.

Photo of Tavish Scott Tavish Scott Liberal Democrat 11:06 am, 11th March 2004

I will deal with the main arguments that have been presented today. I listened carefully to what Mr Sheridan said: he argued that we should scrap the council tax today. In the real world, we cannot scrap the council tax today; we could not scrap any taxation system that we have today. Local government and the agencies that it supports through its funding system must have a mechanism to ensure that the funding continues. That is why a review is the right way in which to proceed and why the Executive has lodged the amendment in my name. It is wholly untrue that we can today make the changes that Tommy Sheridan suggests.

Photo of Tavish Scott Tavish Scott Liberal Democrat

No. I am going to deal with the member's wider points.

The SSP has had five debates on the Scottish service tax, but the main point that we have learned about it is that it has been rejected by five of the seven parties that are represented in Parliament. Curiously, Mr Sheridan has found a tax that is even more unpopular than he would have us believe the council tax is. He keeps telling us that his option is the favoured one, but the Local Government Committee in the previous session of Parliament was robust in its destruction of the Scottish service tax. It is important to consider closely what that committee said. I quote directly from that committee's report on the issue:

"having examined in detail the proposals for a Scottish Service Tax, the Committee sees no merit in this option because the proposal as outlined in ... written evidence to the Committee would replace Scotland's only local tax with a new, national tax; leave councils in Scotland wholly dependent on central government for their funding; and would, in the Committee's view, destroy local accountability for councils' spending decisions."

I rather suspect that that is why five out of the seven parties in the Parliament reject Mr Sheridan's proposals.

Mr Sheridan has been comprehensively defeated every time he exposes his tax, but today he seeks to portray himself as a bringer of consensus to local government, which is a curious concept indeed. Unless Mr Sheridan has abandoned his proposals and converted to either a local income tax or the council tax, he is not part of any growing consensus about a solution. By telling people to run up long-term debts through not paying their council tax, he seeks only to add to the sum of human misery.

Mr Ewing made an interesting speech, although I would find anything interesting after reading his profile in Holyrood magazine. I am sure that many colleagues would like to reflect on the content of that article. The SNP runs hot and cold on the subject. To be fair, the SNP's 1997 manifesto contained a proposal for a local income tax, but it had gone off the idea by 1999—the proposal was not in the party's manifesto in that year, although the party called for a wide-ranging review of local government finance. The SNP was completely silent on the subject in 2001.

Photo of Tavish Scott Tavish Scott Liberal Democrat

Let me complete the litany, if I may.

In 2003, the SNP was a little vague. The manifesto commitment was to an independent review of local government finance and a fairer system based on the ability to pay. It would be helpful if the SNP was clear on the issue.

The SNP has now produced proposals, but Mr Ewing must be careful about how he articulates them. In the article in Holyrood he appeared to me, in supporting George W Bush on a number of issues, to be close to supporting a flat tax. Indeed, he nearly supports Mr Monteith on the reintroduction of the poll tax.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I am in my last minute and we have heard Mr Ewing already—we all enjoyed what he said, but we have heard it.

Iain Smith, Christine May and others will have the chance to develop their proposals and alternatives and to discuss the structure of the council tax as part of the forthcoming review. The Executive is committed to establishing the review as part of the partnership agreement. The review will be extensive and will represent the most serious examination of local taxation ever undertaken in Scotland. All taxation alternatives will have to be compared against agreed tests of fairness, economic impact, ability to pay, collection and cost of implementation.

Mr Sheridan has a short time today to decide whether to stick with his isolated position of banging on about a tax that has been rejected by five of the seven parties or to shift his ground to try to be part of our consensus.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

On a point of order, Presiding Officer. An aspect of debates that worries me is that a rule appears to be developing that no interventions are accepted in the final minute of a member's speech. It is not my understanding that such a rule is written into the standing orders. The final minute of a speech is being used by many members, including the minister just now, to make personalised and political attacks.

Photo of Murray Tosh Murray Tosh Conservative

There is no such rule in the standing orders. It is a convention to allow for the smooth handling of debates. I draw to the attention of members the fact that Mr Swinburne took two interventions in his final minute and managed to finish his speech just three or four seconds over his allocated time. If members are prepared to absorb an intervention in their last minute, that is their choice. In a debate with a tight timescale, I cannot allow members to take an intervention in their last minute and then take more time than they have been allocated. We are now losing time quite seriously.

Photo of Mark Ballard Mark Ballard Green

Is it appropriate under the standing orders to have a debate in which no opportunity is given for an open debate? I refer to the fact that no opportunity has been given to members from one of the parties in the Parliament to contribute to this important debate.

Photo of Murray Tosh Murray Tosh Conservative

Mr Ballard should be aware that the standing orders do not cover such issues. The authority for having the debate is that it was approved in a motion put by the Parliamentary Bureau to the Parliament and passed by the Parliament. That is the basis on which the debate is proceeding, regardless of the unfortunate consequences that follow from it in terms of the allocation of time. We are now behind the clock again.

Photo of Tommy Sheridan Tommy Sheridan SSP 11:12 am, 11th March 2004

Presiding Officer, you would think that highly paid ministers such as Tavish Scott, who earns over £80,000, would be able to read the motion before us, which is:

"That the Parliament agrees that the council tax should be abolished and replaced with an income-based alternative."

I have asked people to vote on that motion today.

Photo of Tommy Sheridan Tommy Sheridan SSP

I am sorry, but would the minister mind behaving himself? That is hard, when he represents a party that fights an election on a commitment to abolish the council tax but then goes into government with a party that has no intention of abolishing it—Christine May stated that clearly.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

Is that not entirely the point? If a vote is taken tonight on Tommy Sheridan's motion without amendment, it will go down. Two parties in the chamber have come together to form a majority that can defeat Mr Sheridan's motion. The amendment will be passed tonight because we have an opportunity to change the council tax by consensus.

Photo of Tommy Sheridan Tommy Sheridan SSP

The problem is that we are a wee bit behind the ordinary people of Scotland, who have expressed their opinions in two opinion polls. In 2001, 73 per cent of Scots wanted the council tax to be replaced by an income-based alternative. When the same question was asked by System 3 last month, 77 per cent of Scots said that they wanted the council tax to be replaced by an income-based alternative.

I remind Labour Party members such as Christine May who are trying to deceive the people of Scotland about what we are talking about in this debate that we are not talking about people not paying for local services. We are talking about those who can afford to do so paying more for local services so that pensioners and low-paid workers can pay less.

I am not surprised that the Parliament has rejected the Scottish service tax because, under our proposals, MSPs will pay an average of £3,000 a year. That is about £2,000 more than they are now paying. The minister will pay significantly more because he can afford to do so. That is the reality. People such as the minister and chief executives across the country—

Photo of Tommy Sheridan Tommy Sheridan SSP

I am sorry, but the minister did not see fit to let me in so maybe he can sit and listen now.

The Parliament needs to recognise that the council tax is no longer acceptable.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

The people will not vote for the SSP's alternative.

Photo of Tommy Sheridan Tommy Sheridan SSP

It is not good enough for Mike Rumbles to come here nine months after the review was promised. I wanted to intervene when the minister spoke earlier about "today, today, today". I will allow him to speak if he can tell me today who is on the review of local government finance. When does it meet?

Photo of Tavish Scott Tavish Scott Liberal Democrat

Mr Sheridan should know the answer to that question because it has been answered earlier. We will announce the review when we are ready to do so.

Photo of Tavish Scott Tavish Scott Liberal Democrat

No, Mr Sheridan should sit down and I will answer his question.

Photo of Murray Tosh Murray Tosh Conservative

Order. Mr Sheridan, you gave way to the minister.

Photo of Tommy Sheridan Tommy Sheridan SSP

I am asking him to sit down because he has finished.

Photo of Tommy Sheridan Tommy Sheridan SSP

He has got nothing to say.

Photo of Tavish Scott Tavish Scott Liberal Democrat

The Parliament is aware that we are discussing this with the Convention of Scottish Local Authorities. If Mr Sheridan does not like that and does not like local government, he should make that clear.

Photo of Tommy Sheridan Tommy Sheridan SSP

That was an interesting intervention. The minister said that he is in discussions with COSLA, but maybe it would be better if he discussed the nursery nurses' dispute with that organisation.

The minister has discussed the review with COSLA for nine months. He has refused to act on the wishes of the people of Scotland, who want council tax to be replaced by a fairer system. I invite him to come to Glasgow on 24 April to march with those who are opposed to council tax. [Interruption.] It is difficult for me to ignore Fergus Ewing's cheap shots because I do not think they befit the maturity of the debate. I hope that the SNP, the SSP, the Greens and others can unite to ditch the council tax. We should put our political differences behind us and put the interests of Scotland's ordinary workers and pensioners first. That is what the minister cannot do.

Photo of Murray Tosh Murray Tosh Conservative

Before I proceed to the next item of business, I wish to make a point for the benefit of the public gallery, which is unusually full today and where people have sat politely and quietly through a considerable amount of business this morning. This is a meeting of Parliament; it is not a campaign rally or a public meeting. Persons in the gallery should be aware—if they are not, I will make it clear now—that they are expected not to applaud or to call out. I hope that they will sit and listen to the next debate with the courtesy and common sense with which they have listened so far.