Council Tax

– in the Scottish Parliament at 10:40 am on 18 March 2004.

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Photo of Trish Godman Trish Godman Labour 10:40, 18 March 2004

The next item of business is a debate on motion S2M-1050, in the name of Fergus Ewing, on the abolition of the council tax, and three amendments to the motion.

Photo of Fergus Ewing Fergus Ewing Scottish National Party 10:48, 18 March 2004

The Scottish National Party is pleased to choose local government taxation as the topic of our second debate this morning. Council tax affects a great many people in Scotland, particularly those on low incomes, fixed incomes and senior citizens. The SNP has brought forward detailed proposals to abolish the unfair council tax, which tends to hit the poorest hardest, and replace it with a local income tax that is based on the ability to pay.

As we know, the Conservatives introduced the council tax in 1993. In every year since its introduction, the council tax has increased beyond the rate of inflation. Since its introduction by the Conservatives, the level of council tax has doubled and, since Labour came to power in 1997, the level of council tax has risen by 50 per cent.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

No, not just yet.

The basis for the SNP's proposal for a local income tax is simply this: we propose a tax that is based on fairness and the ability to pay. The higher the council tax has become, the more manifestly its unfairness has been shown. That is because a tax that is based on the notional value of a building has no connection with people's capacity to pay. For some senior citizens, the council tax represents a quarter of their available income. As for people such as MSPs, on the other hand, who command a handsome salary and a high income, we do rather better. We believe that that is unfair and that that situation must come to an end.

We have set out our proposals in considerable detail. We are usually attacked by the unionist parties for not doing so. It is recognised by the newspapers and by serious commentators that our proposals are workable, serious, well thought out and, more than that, in line with the strand of Scottish opinion about what is correct. I draw attention to the fact that the Chartered Institute of Public Finance and Accountancy has recognised that a local income tax would have considerable benefits. CIPFA has said, for example, that there may be savings of up to £500 million were a local income tax introduced on a United Kingdom basis, and that the tax would be cheaper to collect. Under our detailed proposals, we have set out our belief that savings would be gained, for example, through the lack of any need for a complicated valuation system, which would go. That and other savings would amount to £78 million a year. We believe not only that our proposals would be workable, but that they would be cheaper to administer.

Photo of Des McNulty Des McNulty Labour

Would the member also agree with CIPFA's statement—which I think is on its website—that rushing down that route would be a "disaster for all concerned"?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Well, isn't that interesting? When we make a serious contribution to the debate and set out our proposals in great detail, we hear the charge that we are rushing into something. I ask Mr McNulty to tell us where the word "rushing" appears on our paper, among any of our utterances or in our motion. Is that really the best that the Labour Party can do on our proposals?

Last week, we heard a quite outrageous assertion by Mary Mulligan. Incidentally, I see that it has been dropped in the letter that Mr Kerr sent to Mr Swinney, which I have in front of me, and which seems to be a pretty poor piece of work. Last week, Mary Mulligan said that there was a black hole in our figures. She said that the approximate £300 million that is used in respect of council tax rebate would be withdrawn. The Labour Party here, which is supposed to be a party speaking up for Scotland, is making unilateral threats that money designed to fund the council tax rebate be withdrawn. What sort of definition of home rule do Labour members use if they think that, if we went down our own road and had a local income tax based on fairness, the contribution to which Scotland was entitled should suddenly be withdrawn? Did Mrs Mulligan consult Gordon Brown on that? Will Tavish Scott say whether it is an official Executive policy that the price for Scotland going down a different route would be a Westminster fine of £300 million?

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I see that Labour members do not want to answer that charge, so I will just have to let the Tories in.

Photo of Brian Monteith Brian Monteith Conservative

I am delighted that the member has given way, and I am thankful to him. Were the tax rebate still to be made available, and not withdrawn—if that is the way the member describes it—would it actually be used? If, as Fergus Ewing argues, there were a fairer local income tax, which did not tax people on those levels for which they would otherwise be claiming benefit, then surely the council tax rebate could still exist. It is simply that it would not be drawn down. Therefore, Fergus Ewing's point is anomalous.

Photo of Trish Godman Trish Godman Labour

You are now going into your last minute, Mr Ewing.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I am glad that Mr Monteith has recognised that the council tax is unfair. Is he saying that there should be a Westminster fine? Certainly, Scotland should receive her entitlement, and the idea that that should be confiscated is ludicrous.

Let me turn to the Liberals. The Liberals' policy is curious. On the one hand, they have committed themselves to a local income tax for several decades, yet they do not seem to want it to come in.

Photo of Trish Godman Trish Godman Labour

The member is in his last minute.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

The Liberals say that the local income tax would be introduced by the end of the next session. The end of the next session occurs in 2011, so the Liberals' policy is seven more years of the council tax. There is one tiny problem with that. Their website says "Axe the Tax"—their weapon appears to be the axe. The reality, however, is that we are to have the council tax for another seven years—so their weapon is in fact the review, which the Liberals are using as a fig leaf to conceal the fact that they have no intention whatever of standing up for their principles.

Yesterday was St Patrick's day. Dr Elaine Murray and I had the great pleasure of visiting Ireland as part of our committee business on Monday and Tuesday of this week. We heard the ambitious, bold, imaginative and well-thought-out plans of the Irish for their country. What a tragedy that we do not have an independent Parliament, where we can do likewise and where we can deliver our detailed proposals for a local income tax, on which no one has yet laid a single glove.

I move,

That the Parliament believes that the council tax should be abolished and replaced with a fair system of local income taxation based on ability to pay; notes that the Partnership Agreement published on 15 May 2003 included a commitment to establish an independent review of local government finance; further notes, however, that no such review has been established, and calls on the Scottish Executive to honour its commitment by establishing the review forthwith under an independent chair and reporting back to the Parliament by the end of 2004.

Photo of Tavish Scott Tavish Scott Liberal Democrat 10:56, 18 March 2004

I cannot be the only member here with a strong feeling of déjà vu, particularly after listening to Mr Ewing. We have debated local government finance time and again. It is rather like the line, "Everything has been said, but not everyone has said it." I feel the same sense today. We debated a similar motion last week during Mr Sheridan's time. The facts have not changed since then, but, heck, this is a chance to repeat them.

Mr Ewing has made much of the matter. He has made some interesting contributions today, in particular his criticism of my party—indeed, of both partnership parties—over the matter of a review. Mr Ewing's motion says that the SNP wants a review, but we would not have known that from the last couple of minutes of his speech. He also demanded that we announce such things immediately. I note that Mr Ewing's motion contains the word "forthwith". If a minister stands up and says that something will be done "forthwith", then Mr Ewing and his colleagues howl and scream at us, saying "soon", "shortly" or "at any time in the near future".

Photo of Tommy Sheridan Tommy Sheridan SSP

It is interesting that the minister has managed to remember that we held a similar debate last week. Has he changed his position? Can he now give us more details of the review, which has been promised for nine months?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I accept that the review was promised as part of the partnership agreement. Apparently, Mr Sheridan is going to give me a torrid time again today, so I look forward to that. We will do these things as we do them: in the appropriate way. [ Laughter. ] Well, there we go: members want to have it both ways. Just a couple of minutes ago, Mr Ewing was saying that we were rushing things; his motion says "forthwith"; then he does not want to rush them. Opposition members need to decide what they want.

Photo of John Swinney John Swinney Scottish National Party

I questioned the First Minister on the matter last week, asking him to give us some degree of detail and an idea of when the review might come. The First Minister injected into the debate a line that we had not heard before, which was very interesting. He said that the review would be at some stage during this parliamentary session. That gave some of us a sense that the long grass was near, and that the ball was about to be kicked into it. Can we have some idea of what year in the current session the review will start and finish in?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I can absolutely, categorically confirm that the remit of the review is being considered, and that we will announce how the remit will be taken forward, and the precise nature of the remit, as quickly as we can after the Easter recess. I give that absolute commitment. It will be as soon after the Easter recess as possible.

Photo of John Swinney John Swinney Scottish National Party

I am genuinely grateful to the minister for what he has just said. I take it that the remit will be announced after the Easter recess, but before the summer recess.

Photo of Tavish Scott Tavish Scott Liberal Democrat

Yes—it will be announced after the Easter recess. As with every aspect of government, it would always be nice to be able to stand up in Parliament and say that we have immediately solved all the problems and, in this case, that we have sorted out all the issues around that remit. There are a number of matters that are still under active discussion, but we will bring the remit forward in the appropriate time.

The SNP is calling for the council tax to be abolished and replaced with a system based on ability to pay. The SNP would presumably accept that nobody likes paying tax, that there is no perfect taxation system and that anyone who suggests that there is one is living in cloud-cuckoo-land. I would dearly love, as any minister would, to have the perfect taxation system, which is why we are considering the matter through a review.

It is important to reflect, as Mr Ewing did not, that people on low incomes already get help to pay their council tax. No system is perfect, but low-income households receive assistance. Around a quarter of households in Scotland—

Photo of Tavish Scott Tavish Scott Liberal Democrat

I want to finish the point; I have given way a lot to the front-bench SNP members. Around a quarter of households in Scotland—more than 500,000 households—receive council tax benefit. More than a sixth of households—around 400,000 households—receive full council tax benefit and pay nothing whatever in council tax. Almost 40 per cent of pensioner households receive council tax benefit and we are working with the Department for Work and Pensions to ensure that more of those entitled to benefit apply. It is worrying that four in 10 pensioner households that are entitled to council tax benefit do not apply. That is why the WT, WD—excuse me—the DWP campaign to encourage more pensioners to take up what is theirs by right is appropriate. I hope that Christine Grahame and other colleagues throughout the chamber will encourage and be part of that WB—I cannot say it—DWP campaign.

Photo of John Swinney John Swinney Scottish National Party

The Government could not get the WMDs either.

Photo of Tavish Scott Tavish Scott Liberal Democrat

The council tax benefit system that I have described has been conveniently forgotten in the examples that Mr Ewing has given today. Local government and the agencies that it supports through its funding system must have a mechanism to ensure that that funding continues. That is why a review is the right way to proceed. I commend the Executive's amendment to the Parliament.

I move amendment S2M-1050.4, to leave out from "believes" to end and insert:

"agrees that the 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 a meaningful contribution to the review to submit their proposals when called upon to do so."

Photo of Brian Monteith Brian Monteith Conservative 11:02, 18 March 2004

Clearly the minister could not find his WMDs when he was looking for them.

It is alleged that the council tax is unfair, and John Swinney has given an example of that. I have seen a copy of Mr Swinney's exchange of letters with David McLetchie, in which he asks whether it can be fair that a pensioner with an income of £13,000, living in a band G property, should pay £2,000 in council tax, when a neighbour with an income 10 times that—£130,000—and also living in a band G property, pays exactly the same amount. On the face of it, that seems unjust.

Let us ignore for a moment the value of the property, which is probably in the region of £250,000 to £500,000, because whether that asset can be realised is another issue. The example that John Swinney gave does not tell the whole story. We have to consider the totality of the tax revenues that the two neighbours contribute. Although they probably place similar demands on local services, we need to recall that 82 per cent of that cost is borne by revenue from a broad range of taxes, such as income tax, business taxes, VAT, duties and charges. Someone with an income of £13,000 can expect to pay £1,000 in income tax, which together with the £2,000 council tax gives a total bill of £3,000 in tax contributions. In comparison, the neighbour with an income of £130,000 is paying £44,000 in income tax, which together with the £2,000 council tax gives a bill of £46,000. The neighbour who has 10 times the income is paying 15 times the amount of tax. That is the whole picture and it suggests that the broad taxation system is fairer.

Photo of Christine Grahame Christine Grahame Scottish National Party

Does the member agree that a large burden of tax comes through stealth taxes, such as VAT and petrol charges, which are carried by the low paid and those on fixed incomes, who have no way of avoiding them? He is not showing the whole picture.

Photo of Brian Monteith Brian Monteith Conservative

I am showing the whole picture. I can refer the member to various statistics that show clearly that the largest tax contribution is paid through income tax.

Photo of John Swinney John Swinney Scottish National Party

I am grateful that Mr Monteith has followed the exchange of correspondence with such interest; I know that he is an avid reader of everything on the issue. Does he understand that the fundamental point that I was making in the comparison was that the retired couple have paid handsomely in income tax throughout their working life and now, in their retirement, they are being punished systematically by the council tax? Having to pay 25 per cent of their income in council tax is an unfair burden for those people to carry in the latter part of their life.

Photo of Brian Monteith Brian Monteith Conservative

One has to consider the totality of what people are earning and what they are paying in taxes. It is clear that somebody who earns £130,000 has different outgoings from someone who earns £13,000 and might be paying mortgages and loans—possibly student loans. There are different components. The fact that somebody has an income of only £13,000 means that they will also have fewer outgoings. It is therefore to be expected that council tax will form a larger proportion of their tax contribution.

I will move on, because other aspects of what the SNP is saying need to be taken up. Only a quarter of Scottish businesses pay corporation tax and there are 260,000 self-employed taxpayers in Scotland. Those two facts tell us that, for the vast majority of Scottish businesses, the important taxes are business rates and income tax. Those taxes hit the bottom line and determine what people have available to spend. What does the SNP propose to do? Does it listen to its free-market wing, represented by Jim Mather? No. The SNP is a tax-and-waste party, so John Swinney suggests that it would give local authorities control of business rates and abolish the sole property-based tax and replace it with even higher income tax. A self-employed businessman or businesswoman can expect to pay the basic rate of 40p on his or her earnings, compared with a corporation tax of only 19p. The SNP's proposals would widen that gap and punish severely one of the most important sectors of our economic community.

I move amendment S2M-1050.3, to leave out from "the council tax" to end and insert:

"local taxation cannot be viewed in isolation and must be seen as part of the overall taxation system, particularly as locally variable taxes only raise 18% of council revenues with the rest coming from charges, business rates and central government grants and further believes that the independent review of local government finance must take account of what range of responsibilities is best administered locally and ensure a broadly-based system of national and local taxation with a combination of income, consumption, capital and property taxes as the best way of delivering a fair and balanced system."

Photo of Mark Ballard Mark Ballard Green 11:07, 18 March 2004

We have heard various arguments in support of an income-based local tax. The underlying principle is perhaps best expressed as, "The broadest back should bear the greatest burden." That is a fine principle, but I do not believe that it necessarily holds in this case.

Taxes are on wealth, but wealth comes in many guises. The most straightforward argument against a local income tax is that it is not sensible to put all our fiscal eggs in one basket. There are also many practical problems with local income tax. Individuals move between local authority areas and an employer can employ staff from many different localities, therefore a huge administrative burden would be created. Those who are in favour of extending income tax wish to do so because of its apparently clear redistributive nature. However, income tax is a tax on working and it fails to distinguish between earned and unearned income. It is hugely complex, evasion is rife and a legion of accountants is employed to ensure that the very wealthy can easily avoid paying their proper share.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

If a local income tax would be so difficult to collect, how does the Inland Revenue manage to collect income tax so well?

Photo of Mark Ballard Mark Ballard Green

The point of a local income tax is that it would be different in each local authority area. We heard an example in the debate last week of a company that might employ people from many different local authority areas, given that those areas are small. That is the problem. Individuals can move between local authorities and work in different areas, but land and property do not move. That is why we need a portfolio of taxes and why we need to keep a property tax, rather than the flawed system of council tax and business rates. A property tax of the right form is a fundamentally just way in which to raise public revenue, and a tax on local property is an appropriate way for a local authority to raise such revenue. We must reform property taxation, not simply bin it in exchange for a local income tax.

For that reason, on Friday I introduced my proposal for a bill to do just that. The proposed reform of council tax and business rates (Scotland) bill would modify the system for funding local government in Scotland. The key reform that the bill proposes is shifting the base of assessment away from whole property values on to land value only. The Parliament has expressed interest in that approach by agreeing to the motion to investigate land value taxation that was lodged by my colleague Robin Harper in January last year.

When the Chancellor of the Exchequer presented his budget to the House of Commons yesterday, he committed himself to investigating the possibility of taxing land value. Land value derives from the value that we place on particular locations. It is a function of the public services and other advantages that a site enjoys, together with the economic activity of the surrounding community, and democratic planning consents—that is, the planning permission that is given over the land—unlock those values. Land values are created by the community and they are therefore a proper source of public revenue.

My bill would compensate the community for the advantages that an owner enjoys through their monopoly use of their site. The principle is that the more someone takes from the community chest, the more they pay—a tax on land values is as simple as that. It is a genuinely progressive tax and it would benefit those who use tax wisely and efficiently. Occupancy rates would increase as landlords would suddenly have an incentive to fill vacant properties.

Let me finish with a short case study to further explain the benefits of land value taxation compared with local income tax. Mr Mohamed Al Fayed, who owns Balnagowan Castle and its 60,000 acres of surrounding land, announced on Tuesday that he is moving out of Britain to evade income tax. Under a system of local income tax, Mr Al Fayed would cease to make any payment at all to the community. I would say that he is a man who can afford to pay.

Photo of Mark Ballard Mark Ballard Green

Mr Al Fayed is a man with a broad back indeed. Under a system of land value taxation, his estate would still be taxed, which is nothing more than reasonable. If the need arose, he would need fire engines to turn up to deal with a problem at his property. He would need local services and he should therefore pay for them, but that would not happen under a local income tax system. My bill would ensure that people such as Mr Al Fayed had to compensate the community properly for the advantages that they have.

It is evident that land value taxation helps to ensure that the broadest back carries the greatest burden. We need to maintain a local tax on local property.

Photo of Mark Ballard Mark Ballard Green

Land value taxation is the fairest way to do that.

I move amendment S2M-1050.2, to leave out from "income" to end and insert:

"taxation based on land values; notes that the Partnership Agreement published on 15 May 2003 included a commitment to establish an independent review of local government finance; further notes, however, that no such review has been established; calls on the Scottish Executive to honour its commitment by establishing the review forthwith under an independent chair and reporting back to the Parliament by the end of 2004; believes that local taxation based on land values will be to the benefit of Scotland's economy, society and environment, and welcomes the commitment the Chancellor of the Exchequer made in presenting his budget for 2004 to the House of Commons to investigate the possibility of taxing land values."

Photo of Murray Tosh Murray Tosh Conservative

I clarify that members are on four-minute speeches.

Photo of Des McNulty Des McNulty Labour 11:12, 18 March 2004

Margaret Ewing gave the game away last week when she said that she has been a member of the SNP for many years and that the SNP has been in favour of a local income tax for all that time. Why, then, did John Swinney put so much effort into going round the studios a week ago last Friday to announce the new SNP policy on local income tax? Perhaps it was to do with the fact that the SNP's 1999 and 2001 election manifestos made no mention of a local income tax. Even in 2003, the SNP's manifesto was for an independent review of local government finance, which is, of course, what the Deputy Minister for Finance and Public Services has said will happen later this year.

Fergus Ewing claimed that no one has laid a glove on the SNP's local income tax proposal, but the reality is that the proposal never got to the ring because it failed the most basic credibility tests at the weigh-in. The central flaw in the SNP's proposal is that it assumes that payments that are made to individuals in the form of housing benefit and rebates for council tax can somehow be transferred to the Scottish Executive and used as financial ballast for the SNP's local income tax policy. As we have seen, there is no justification for such a transfer. It is for us to introduce local income tax if that is what the people of Scotland want.

Photo of Des McNulty Des McNulty Labour

No. I will carry on.

We can hardly expect the UK rules on benefit entitlement to be adapted to suit the removal, especially if it involves money being transferred from individuals and taken over by Government.

That is a thoroughly bad principle, as I am sure Brian Monteith would agree.

Photo of Des McNulty Des McNulty Labour

No, I will not.

Fergus Ewing has a habit of never letting the truth get in the way of a bit of rhetoric. The reality is that 400,000 people in Scotland do not pay council tax and a further 131,000 get partial relief from it. How many of those people would be losers if the SNP got its way? The answer is not clear from the false examples that the SNP provides, because it calculates that the replacement of council tax would mean a 4.3p increase in income tax. That is just wrong, not only because it counts in £320 million that is unlikely to be available, but because the SNP's core understanding of the income tax system and its impact on individuals is desperately wide of the mark. That is even more the case after yesterday's budget, but even before yesterday most reputable commentators suggested that the rate that would be required to cover the amount that is raised by council tax would add a minimum of 7p to income tax.

I do not want to bandy figures about with Fergus Ewing, because I know that he has some difficulty with adding up. Probably the most ridiculous part of the SNP proposal is the idea that there will be 32 different levels of local income tax in Scotland. We heard last week that there would also be 32 different levels of business tax. How many rates of tax does the SNP want? Does it want one rate for every individual in Scotland, in line with its desire for a policy for every corner of Scotland?

Photo of Des McNulty Des McNulty Labour

There are some unfairnesses in the present system, and Margaret Ewing made some genuine points about some of the people who live in her neighbourhood in Lossiemouth, but it should be recognised that the overwhelming majority of pensioners and people on low incomes who live in houses in bands A, B and C are protected under the present arrangements. Many of those people would be disadvantaged by the SNP's proposal, under which, contrary to the claim in the SNP's document, low-income pensioners would become liable to pay tax.

Last night, I spoke to a member who had been considering buying a house in Edinburgh, only to find that the house is close to the Edinburgh residence of Fergus and Margaret Ewing. The prospect of seeing Fergus rushing for the papers each morning to see whether his name is in them ended my informant's interest in the property. I finish by asking Fergus Ewing, as a person with at least two properties, whether he would pay the local income tax in Lossiemouth or the local income tax in Edinburgh. Why could he not pay both? That would be a good idea.

Photo of Murray Tosh Murray Tosh Conservative

Time is now very tight indeed for the open debate.

Photo of Christine Grahame Christine Grahame Scottish National Party 11:16, 18 March 2004

Tavish Scott might not be in a rush, except to move to a slow review—he has been in coalition for five years—but the people out there have had enough. I have had a successful series of meetings throughout the Borders, which pensioners attended in large numbers. They are desperate to get rid of the unfair council tax. Their income has stayed still, and I must say to Brian Monteith that his contribution about the value of houses will have turned many pensioners against him. That is particularly so in the Borders, where average earnings are £80 per week less than those in the rest of Scotland and there has been a 57 per cent increase in council tax and water charges in the past five years. There have been 1,000 signatures on a petition to the Scottish Parliament in a few weeks. After five years in power, the minister might not be in a rush, but the people will not wait any longer.

I love the internet. It was interesting to trawl again to my favourite site—it is in my favourites—which is the Liberal Democrat "Axe the Tax" website.

Photo of Tavish Scott Tavish Scott Liberal Democrat

Why, if the issue has been so important in the past five years, did the 1999 SNP manifesto not mention local income tax?

Photo of Christine Grahame Christine Grahame Scottish National Party

Mr Scott should be terribly careful with manifestos. We all know about the Airborne commitment in his party's manifesto, which he dropped at the first whiff of creaks in the partnership. Just like Mr Scott, we have been committed for years to a tax that is based on the ability to pay—only Mr Scott is in power and he is doing nothing about it. He is doing a lot on his website, which says:

"As Liberal Democrats, we have campaigned to replace Council Tax with a fairer system ever since we were formed - firstly as a replacement for the rates, then for the Poll Tax, and now to replace Council Tax. We're nothing if not consistent!"

That is a new one on me.

The website says that people can get involved in the petition and it continues:

"The more people who back the campaign to replace the Council Tax, the more pressure the Government will feel. The Tories had to back down on the Poll Tax. It's time Labour did the same over the unfair Council Tax."

It is signed, "Ed Davey MP". He goes on to say—

Photo of Christine Grahame Christine Grahame Scottish National Party

I am on a roll just now, Brian.

Yesterday's press release from Ed Davey is headed "£100 for council tax is dishonest gimmick". In it, he says:

"Tucked away in the budget is the statement that council tax will increase by 7.4% ... making an average band D property bill £1253.37. This increase is more than three times inflation and amounts to a stealth tax. Although Labour is clearly running scared in the face of the powerful Liberal Democrat campaign to scrap council tax, they still haven't grasped the depth of feeling against this tax from the various groups affected by it. The only fair solution is to scrap council tax and replace it with local income tax, based on the ability to pay."

He also says, in brackets—not on that site—that the Liberal Democrats will set up a review.

Lastly, on

"Why the Council Tax Has to Go", the Liberal Democrats say:

"While the Conservatives must take the blame for introducing such an unfair tax, Labour have made it worse, partly by inaction and partly by their over-centralised control of the council grant system."

Inaction? Who is being inactive? Ah, the wonderful Liberal Democrats. What would we do without them? They get rid of their principles at the drop of a hat. The list is endless—Airborne, fair voting in local government, local income tax and fisheries. They would do anything to be a deputy minister with a wee caur at the door.

Photo of Tommy Sheridan Tommy Sheridan SSP 11:21, 18 March 2004

Christine Grahame has just spoken about consistency, so it is appropriate that I should now speak in the debate. Despite the fact that many members have consistently opposed the proposals to replace the council tax that the Scottish Socialist Party has brought to the chamber, no member can deny that we have consistently and tenaciously suggested those proposals because we think that the issue is a priority. We are pleased that more parties and individual MSPs agree that the issue is a priority. I hope that we can usher in a new dawn of unity and consensus on behalf of low-paid workers and the pensioner community throughout Scotland to ditch an unfair tax.

In 2000, we commissioned System 3, which is not the Conservatives' favourite polling agency but tends to be quite accurate in other areas, to conduct a poll on whether the Scottish public believed that the council tax is unfair and should be replaced by an income-based alternative. It is important to emphasise the words "should be replaced by an income-based alternative", because some members of the Executive team try to parade their defence of the council tax by saying that people are opposed to the council tax only because they do not want to pay any taxes at all. People are clear that local services must be paid for, but they are also clear that the council tax is an unfair method of paying for such services.

In 2000, the System 3 poll returned a result that 71 per cent of the Scottish population believed that the council tax should be replaced by an income-based alternative. In February 2004, we asked System 3 to conduct another opinion poll, the result of which was that 77 per cent of the population of Scotland believed that the council tax should be replaced by an income-based alternative. The Parliament is beginning to catch up with the people on the issue.

The Parliament must unite around the principle of replacing the council tax. That is why I appeal to the Liberal Democrats. I am glad that Tavish Scott has, at long last, made a commitment and that there will be an announcement between the Easter recess and the summer. We will keep Tavish Scott to that. What he said will be in the Official Report and I am glad that it will be; it is nine months late, but at least it is in the Official Report.

Photo of Tommy Sheridan Tommy Sheridan SSP

We will look for a timescale. A review should not be kicked into 2007 before a proposal is made. A review should report back within a nine-month or 12-month period in order that an unfair tax system can be replaced in the Parliament's mid session.

I would like the council tax to be replaced much sooner than that. If a majority of MSPs wanted to replace the council tax, we could vote to replace it in the next financial year so that the current council tax bills would be the last such bills that would ever be presented. However, given that the Liberal Democrats will not join others who back the scrapping of the council tax, there might need to be a delay.

It is vital that we start to debate alternatives. Rather than having 32 local authorities setting individual taxes, we want an alternative that is set throughout Scotland, because that would be a clearer, more easily managed system and the money would be easier to collect. However, if the choice were between a local income tax across 32 local authorities and the current council tax, we would vote for the local income tax as an improvement. Local income tax would not be as good as the service tax, but it would be an improvement.

Photo of Tommy Sheridan Tommy Sheridan SSP

We must conduct such a debate now on behalf of the ordinary people of Scotland. The poverty that surrounds far too many families is growing and we must put an end to it.

Photo of Murray Tosh Murray Tosh Conservative

You must stop now. I call Iain Smith, who will be followed by Stewart Stevenson.

Photo of Iain Smith Iain Smith Liberal Democrat 11:25, 18 March 2004

I am pleased to have an opportunity at last to contribute to the debate and to promote the long-standing and consistent support of the Scottish Liberal Democrats for replacing the unfair council tax with a fairer local income tax that is based on ability to pay.

The problems relating to the council tax have been well rehearsed. The tax is based on the value of where a person lives rather than on their ability to pay and it hits hardest those who are on the lowest incomes. Even Gordon Brown has recognised that this week by accepting that the over-70s have to pay a larger share of their income in council tax and by giving them, belatedly, a one-off bung to stave off a pensioners' council tax revolt in England.

Photo of Iain Smith Iain Smith Liberal Democrat

I am sorry, but the SNP did not take any interventions from me. I will not take an intervention from that lot today.

Photo of Iain Smith Iain Smith Liberal Democrat

I am not frightened—SNP members are.

The problem is that property value is used as a proxy for wealth, but it is not a proxy for wealth, as some seem to suggest. Two families that have very similar incomes and live in similar houses in, for example, St Andrews and Lochgelly in Fife, will find themselves paying vastly different council tax bills to Fife Council simply because of where they live.

In last week's debate, Christine May suggested that the wealthy would be able to duck the local income tax, but the council tax banding system builds in ducking for the wealthy. Everyone who lives in a property that is valued at more than £212,000 pays the same, whether they earn £20,000 or £200,000, and whether they are a single pensioner on a fixed income or a household of multiple earners. Everyone pays the same.

I do not believe that the revaluation or rebanding, which is the Labour alternative, will deal with that problem. For example, an elderly couple who live in Edinburgh will find that the value of their house has shot up since the valuation in 1991 and they will be faced with huge council tax increases that are based on the same fixed income.

Photo of Mark Ballard Mark Ballard Green

Does the member believe that property is a form of wealth?

Photo of Iain Smith Iain Smith Liberal Democrat

I believe that property can be a form of wealth, but property is also something in which people live. The ability to live somewhere is a fairly fundamental human right. Therefore, one must be careful about saying that property is a proxy for wealth or income. Property is somewhere where people live and the value of a person's property is not necessarily based on their income or their personal wealth—it is based on where they live. That is the problem.

Photo of Iain Smith Iain Smith Liberal Democrat

I am sorry, but I am running short of time—I have only four minutes.

In effect, the elderly couple on a fixed income in the house in Edinburgh, whose council tax bill will shoot through the roof, will be faced with a simple choice—they will either have to pay up or sell up. From their fixed income, they will have to find enough to pay the increased council tax bills or be forced out of a house that they may have lived in all their lives. That is unacceptable.

I will not waste much time on the Conservatives, because we know what their policy is. They are in favour not so much of getting rid of the council tax as of getting rid of councils, which I am not in favour of. If we read between the lines of what the Conservatives say, we see that they would deal with the council tax problem simply by removing important local functions from local authorities, such as health, education and care of the elderly. I want no part of the Tory agenda to emasculate councils and destroy local democracy.

Photo of Iain Smith Iain Smith Liberal Democrat

I welcome the SNP's recent conversion to local income tax. [ Interruption. ] I have looked at the SNP's manifesto and there has been a recent conversion—or perhaps a reconversion—to the case for a local income tax.

I agree with much of what the SNP says in its publication "Proposal for a Local Income Tax". That is not surprising, because, as Christine Grahame rightly pointed out, much of it seems to have come straight from the Liberal Democrats' campaign website to scrap the council tax.

The case in favour of local income tax is overwhelming and I have every confidence that that can be proved to the independent inquiry. However, I must say to Fergus Ewing, Christine Grahame and Tommy Sheridan that there is not yet a majority in the chamber even for scrapping the council tax. There are Labour and Conservative members who do not want to scrap it. There is even less of a majority for a local income tax. We must work together to create a majority.

Fergus Ewing should do the math. The Liberal Democrats have a tradition of working hard with others to build majorities.

Photo of Iain Smith Iain Smith Liberal Democrat

We built a majority in the constitutional convention to get the Parliament, we built a majority to get rid of tuition fees and we will build a majority in respect of local income tax.

Photo of Iain Smith Iain Smith Liberal Democrat

The SNP should stop turning the issue into a political football and work with us—

Photo of Murray Tosh Murray Tosh Conservative

Mr Smith, your microphone has been turned off. You are over time. Sit down and resume your seat.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party 11:30, 18 March 2004

This has been an interesting debate, with more heat than light. Tavish Scott made an interesting point about the way in which council tax benefit works in relation to the current system. However, one of the key issues to bear in mind is the under-claiming of council tax benefits to which people are entitled compared with the claiming of benefits that are provided by the income tax system, which ensures that everyone can get what they are entitled to. The claim that the council tax system works fairly and properly because people may claim benefit is therefore not an adequate argument in favour of it.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I take Mr Stevenson's point, but that is exactly why we support so strongly the work of the department in London—the one whose name I could not pronounce earlier—that is specifically taking forward the take-up campaign in relation to council tax benefit.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I support any campaign that will ensure that we increase the level of take-up of benefits of all kinds. The difficulty is that the Government will not achieve the take-up that would be achieved via an income tax system, no matter how hard it tries. That is the fundamental problem.

The minister is not alone in being confused. Brian Monteith showed that he moves in rather different circles from those in which I move when he suggested that the self-employed are on a 40 per cent marginal rate of income tax. I invite him to visit my constituency, where there are many very poor self-employed people, some of whom pay no tax at all and of whom only a small minority pay 40 per cent. The whole point of an income tax system is that what someone pays is based on what they can afford.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Look at the clock—I do not have time. I am sorry.

Mark Ballard promotes the land value tax—as usual and as is proper, given his party's commitment to it—but fails to explain how one may trade a capital asset into a revenue stream to pay tax. It is the same problem whether people have locked-in value in a capital asset in land or in houses: they simply cannot use it in that way.

Iain Smith suggests that it is unfair that people pay different levels of tax depending on where they live in a council area. That is the present position under council tax. That was a valuable contribution for Iain Smith to make to the debate, as it highlights the fact that local decision making—

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I am in my last minute and am running out of time.

Des McNulty suggested, with a cavalier disregard for the interests of the people of Scotland, that we could hardly expect London to change the rules because we want to change the way in which our local councils gather income. Is not that precisely why the Scottish Parliament needs the full powers of a normal Parliament? That was an aberration on his part. He also said that low-income pensioners would start to pay tax, which shows a basic misunderstanding of the income tax system. Was that an aberration on his part, or an adumbration that we will shortly see a change in that regard?

I have had only a limited amount of time to speak, but that is as nothing to the limited time that the Government will have if it fails to respond to this problem. The minister must listen up or lose out.

Photo of Murray Tosh Murray Tosh Conservative

I apologise to John Swinburne. Other members have taken much of his time and I can allow him only two minutes.

Photo of John Swinburne John Swinburne SSCUP 11:34, 18 March 2004

This has been a good debate. I enjoyed Des McNulty's boxing analogy. He should have kept working at it—he could have been a contender.

Our election manifesto called for the council tax to be replaced by a fairer local income tax. Until that happens, I call on local authorities to cap council tax increases for pensioners in line with the increase in their state pension.

I also give my full support to a petition, which is being submitted to the Scottish Parliament as we debate this issue, by a coalition of 15 major older people's groups. The petition—which I instigated in August, with the assistance of Help the Aged—calls for an inquiry into local government finance with the appropriate remit and independence to end the iniquity of the existing system, which has become unacceptable to the older communities who are an important sector of Scottish society.

Like many pension funds, local authority pension funds are in the red. However, unlike the rest of society, local authorities are not obliged to disclose the level of pension subsidy that they reallocate from council tax. In essence, pensioners who are living below the poverty line are paying for local authority pensions. That is totally unacceptable, and I call on the Executive to look into that practice urgently.

It is perfectly feasible that, with a listing of pensioners provided by the Department for Work and Pensions, local authorities could cap all above-inflation council tax increases for pensioners at the same level of increase as the state pension. That capping could operate on a temporary basis, until the SNP's motion was agreed to.

Photo of Murray Tosh Murray Tosh Conservative

I am obliged to you for your timekeeping, Mr Swinburne.

I call Robin Harper to close for the Greens. I have reduced your time to three minutes, Mr Harper.

Photo of Robin Harper Robin Harper Green 11:36, 18 March 2004

I make it perfectly clear that the Executive must take on LVT in its review. The debate today has been restricted to a knock-about discussion of council tax and income tax, leaving out the third, very important, possibility that could be considered.

I cite the city of Harrisburg as a place where LVT does some of the things that income tax does not do. To Des McNulty and people living in the west of Glasgow I say that, a decade ago, LVT was introduced in Harrisburg and $3 billion of extra economic development was put down to LVT. LVT taxes vacant land and brings it into use—that is what happened in Harrisburg. People queued up to use acres of vacant land because it was going to be taxed and they did not want to hold on to it any longer.

We do not have a cadastral register of land in Scotland. LVT would introduce such a register, and we would know who owned what land in Scotland. We do not know who owns 20 per cent—a fifth—of all land in Scotland: it is held in offshore trusts and the money is drained out of the country. We do not know who that money is going to or why.

Photo of Robin Harper Robin Harper Green

No. I have only three minutes. I am sorry.

LVT would be our tax and we could construct it as we wanted to construct it, which would address all the objections that have been raised in the past about little old ladies living in houses. Exactly the same kind of derogations could be made within LVT as are made through the council tax. I listened with interest to what John Swinburne said about compiling a list of pensioners.

Windfall rises in the value of land currently go into the pockets of developers and the people who own the land, not into the Exchequer, which is where windfall rises should go. We should recover those windfall rises for the community, and LVT would achieve that.

LVT would also force the use of land banks, especially in places such as Edinburgh, where quite a lot of land is still being held in land banks and is put into community use only when it suits the developers. That land would be taxed under LVT and there would be pressure on the developers to put it to use.

I have received an invitation from the city of Harrisburg to go there to see what is happening and find out why the people of Harrisburg and other cities in the United States are so keen on LVT. So that I am not accused of going on a jolly, I pass that invitation on to the Executive so that, when it comes to its review, it can send a team out there to conduct an in-depth evaluation.

I support the amendment in the name of Mark Ballard.

Photo of Murray Tosh Murray Tosh Conservative

I call Bristow Muldoon to close for the Labour party. Mr Muldoon, you have a strict four minutes.

Photo of Bristow Muldoon Bristow Muldoon Labour 11:39, 18 March 2004

As time is very limited, I apologise in advance to members if I do not take any interventions. Members will know that I usually accept interventions.

There are legitimate reasons for having this debate today. For a start, people are concerned about increases in council tax, although I contend that much of that concern has been driven primarily by increases in England and Wales. There is also concern about the impact of the tax on pensioners and other low-income households; questions have been raised about the fairness of the tax itself; and local authorities want a fundamental review of local government finance.

As members have suggested a variety of ways of improving the local taxation system, I want to consider the approaches that the Labour Party, the Scottish National Party and the Scottish Socialist Party have proposed. In the Labour manifesto, we clearly stated that the council tax system should be improved. We also reflected that the current banding system is perhaps not as progressive as we would wish it to be. In the forthcoming review of local government finance, the Labour Party will argue for improvements to the banding system to enhance its fairness. In that respect, Iain Smith's criticisms of the current banding system made Labour's case for reforming the system and improving its progressiveness in the way that we have advocated.

Des McNulty referred to the council tax benefits system. We must acknowledge that, in the current system, there is some relationship to the ability to pay; after all, 25 per cent of all households and 40 per cent of pensioner households receive some form of council tax benefit. The deputy minister was absolutely right to argue that the 35 per cent of pensioner households that are entitled to council tax benefit but do not claim it should be encouraged to do so. We should support the efforts of the UK Government and local authorities to improve the situation and ensure that all pensioners claim the benefits that they are legally entitled to. Moreover, we should also welcome Chancellor Gordon Brown's recognition in yesterday's budget that many pensioners exist on lower incomes and his announcement of a £100 payment for the over-70s to mitigate council tax levels.

As with many debates in this Parliament, the SNP's approach is inconsistent and incoherent. Week after week, SNP members advocate lower levels of taxation. For example, we have heard their arguments for lower levels of corporation tax, lower local business rates and—this morning—lower levels of local taxation.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

Does Mr Muldoon not accept that the SNP quite clearly recognises that those who are better off—for example, those who earn more than £50,000, £60,000 or £70,000—are likely to pay a bit more under its proposed tax system than they currently pay, because that is only right and fair?

Photo of Murray Tosh Murray Tosh Conservative

Watch your time, Mr Muldoon.

Photo of Bristow Muldoon Bristow Muldoon Labour

Mr Ewing misses the point. As he is on the right wing of the SNP, he consistently argues for lower levels of taxation, while the SNP's left-wing front-bench members have argued for higher levels of public expenditure. The SNP cannot have it both ways; it cannot have Scandinavian levels of public expenditure based on Irish levels of taxation.

The SSP is similar to the SNP in one regard. In arguing for higher levels of income tax for higher earners, Tommy Sheridan often mentions the extra money that an Executive minister or an MSP will pay under his system. However, we do not hear quite so much about how much extra a hospital consultant or an academic will pay.

Photo of Bristow Muldoon Bristow Muldoon Labour

Although the SSP supported the pay dispute by the Association of University Teachers Scotland, it stayed pretty silent about the fact that any increase that union members got would disappear in the SSP's plans for a local income tax, which would—[ Interruption. ]

Photo of Murray Tosh Murray Tosh Conservative

No. Mr Muldoon, I could not have been clearer. You had a strict four minutes, and your time is up.

I call David Mundell to close for the Conservatives. You have four minutes, Mr Mundell.

Photo of David Mundell David Mundell Conservative 11:44, 18 March 2004

This debate has been interesting. Indeed, I will be interested to hear Mr Scott's response and find out whether he is replying on behalf of the existing coalition or the new coalition between the Liberal Democrats and the SNP that Mr Smith suggested.

The Liberal Democrats cannot have it both ways. The other day, I received a leaflet headed "Axe the Tax" through the door of my Edinburgh flat. However, the leaflet came from the Liberals, not the SNP, and informed me that the Liberal Democrats were in the vanguard of ensuring that the council tax would be abolished in Scotland. They will not be in that vanguard after today's performance.

It will not surprise anyone in the chamber that the Conservatives will not be supporting Mr Ballard's amendment. If the Greens were in charge of the country, the debate about introducing a local income tax in Scotland would be completely irrelevant because their policies would mean that no one would have any income to tax.

Although I accept that some people are paying unfair levels of council tax, that is predominantly because of the choices that have been made by the council administrations under which they live. It was probably because her time was limited, but it surprised me that Christine Grahame did not point out to the chamber that people in the Borders have to pay such a high level of council tax because of the mismanagement of Scottish Borders Council's finances by the previous Liberal Democrat administration that brought the council itself to its knees. When a joint administration involving the Conservative party sought to reduce the level of council tax that the Liberal Democrats had proposed, the Liberals voted against it and then Liberal Democrat councillors claimed that the Scottish Executive treats the Borders unfairly. I suggest that that is a bit of an indictment of Mr Purvis and Mr Robson.

The situation is not much better for people who live under SNP local authority administrations. For example, the SNP in Dumfries and Galloway Council does not have any policies; certainly, the fact that its members do not follow the party's national policies has allowed them to go into coalition with Labour and the Liberals. Indeed, they even suggested a coalition with the Conservatives. However, that was not for us. I have to say that, when SNP members were at the heart of the administration, we saw a 20 per cent rise in council tax. In fact, they are still in the administration and back public-private partnerships, school closures and anything else that ensures that leading SNP councillors retain their allowances. If we have a party like that in local government, how can we be confident about the levels of the new income tax that it would levy? In this respect, I agree with the new, turbocharged Des McNulty. The minimum level of a local income tax would be 7p, and a lot of people would be a lot less well-off under such a regime.

We favour a review that takes into account not just this narrow element, but everything to do with local government funding. It is interesting that the review will be announced between Easter and the summer recess. Some members will not have missed the fact that the Parliament will not be sitting for three weeks of that period, and I very much expect the details of the review to be announced then to ensure the usual fudge by the Labour and Liberal Democrat parties. At the end of the day, the most likely outcome of the review is that a lot of people will be paying a lot more in council tax.

Photo of Murray Tosh Murray Tosh Conservative

I call Tavish Scott to respond for the Executive. Minister, you have a strict five minutes.

Photo of Tavish Scott Tavish Scott Liberal Democrat 11:48, 18 March 2004

Thank you, Presiding Officer. As with many other things, I seek to be held to that.

In Scotland's new Parliament and evolving democratic system, it is important that the fundamental issues of local government finance are given the proper airing, considerable scrutiny and a lot of time in the chamber and the Parliament's committee rooms. In that sense, I welcome any opportunity to debate these matters in the chamber, because they are fundamental to many aspects of public service delivery. We will establish the review as part of the partnership agreement. It will be comprehensive and represent the most serious examination of local taxation that has ever been undertaken in Scotland.

Photo of Tavish Scott Tavish Scott Liberal Democrat

I want to make some progress, if I may.

All taxation alternatives, including the various forms of local income tax and reforms to the existing council tax system, will be compared against the agreed tests of fairness, economic impact, ability to pay and the cost of collection and implementation. As such considerations are important, I trust that members of parties and other organisations that are not formally represented in Parliament will take the opportunity to play their role in the review.

Photo of Robin Harper Robin Harper Green

The minister did not give a specific commitment to including land value tax in the review. Will he do so now?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I have no difficulty at all in saying that I very much hope that Mr Ballard will submit his proposed bill to the inquiry. We have discussed previously in Parliament the Green's proposals for site value taxation, which are an important contribution to the debate. I hope that the Greens accept that their proposals will receive the same scrutiny in the inquiry as those of other parties.

I very much agreed with Mr Monteith's remark about the totality of tax. I hope that he accepts that consideration of issues in their totality should also apply to business taxation. Not so long ago, an important international comparative study of business taxation illustrated clearly that Scotland's businesses are at the same level—if not at a better one—as many other competitor nations. I am sure that Mr Monteith would accept that, if he wants to make a point about the totality of taxation, he must do the same for business taxation.

Photo of Brian Monteith Brian Monteith Conservative

That is an interesting point. In general, I have no difficulty with considering the totality of taxes for businesses. In that respect, does the minister agree that to hand over the setting of business rates to local government would be akin to putting Saddam Hussein in charge of Porton Down?

Photo of Tavish Scott Tavish Scott Liberal Democrat

I would not use such emotive terms, but I will come on to the important point that Mr Monteith has raised.

I know that Mr Mundell is fighting a campaign for a Westminster seat, so I accept the political knock-about of what he said earlier. I also accept his love-in with Christine Grahame and how much they enjoy attacking the Liberal Democrats. All I can say about Christine Grahame is that she lost in 1999 and 2003 and will lose at the next election as well.

Photo of Tavish Scott Tavish Scott Liberal Democrat

A loss is a loss. I know that it is tough to take and that it really hurts her. I hope that her phone is okay today.

Mr Monteith encouraged me to look at the SNP's proposals on business tax. It was interesting that Mr Ewing did not raise that matter in his opening speech. I expected that he would, given that Mr Swinney made much of the issue at the weekend and has done so since. Irrespective of those issues, the important point is the one that Bristow Muldoon made, which is that the SNP tries to have it both ways. It cannot argue, on the one hand, that it will reduce business taxation in a particular local government area and, on the other hand, that that would have no effect on the delivery of public services. However, I suspect that the SNP will continue to try to argue both.

I turn now to the SNP amendment. It is deeply curious that the SNP attacks others in relation to the council tax rebate system while it argues for a local income tax. It is not possible to argue that the council tax rebate system is an outrage and a disaster and that it is simply unacceptable to give in on the issue while arguing for a local income tax. The council tax rebate system exists because of the council tax. It is bizarre to argue for both sides of the coin at the same time, but that is what the SNP does. However, the SNP really gave the game away when Mr Ewing finished up with a constitutional point about the Scotland Act 1998. That is the game that the SNP is playing. Indeed, I noticed that Ms Cunningham said at the weekend that the debate was about powers being passed back from Westminster. The debate is not about that but about local determination of decisions. I ask members to support the Executive's amendment to that effect.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party 11:53, 18 March 2004

Most speakers in the debate have agreed to some extent that the council tax is unfair. After the abolition of the late, lamented poll tax, which was introduced by the Conservatives, everybody was so glad that it had gone that they were prepared to accept the unfairness that is inherent in the council tax. In addition, the council tax was much lower in those days and the unfairness did not seem to matter. However, since then, under both Conservative and Labour Administrations, we have had successive inflation-smashing increases in council tax, and people are no longer prepared to accept the in-built unfairness in the tax.

Brian Monteith does not agree with that. He wants to continue to send out the council tax bills that are going up by more than the rate of inflation each year and to print "Look at the totality" on them. Apparently, that would satisfy everybody and make the council tax totally acceptable.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I will do so briefly, but this will be the only occasion.

Photo of Brian Monteith Brian Monteith Conservative

I thank Mr Morgan for giving way. He would know, if he looked at the figures, that the Conservatives throughout Scotland have suggested consistently lower council tax levels than the SNP has suggested. Can he tell members—nobody else has done so yet—how revenues would be collected from those who own two properties?

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Revenues would be collected according to people's ability to pay. Clearly, Mr Monteith does not agree with that concept, so there will never be a meeting of minds on that subject. On particular council tax rates, Mr Mundell said that it is all down to the local party that is in power. The facts do not particularly support that. He mentioned Dumfries and Galloway, where the SNP shares in an administration that has had one of the lowest council tax rises—and one of the lowest levels of council tax—in mainland Scotland. I suggest that that is not a particularly bad record.

The truth is that large rises have made the council tax increasingly unacceptable and no amount of slick presentation, in which the hidden bad news leaks out in the weeks following—such as in yesterday's budget speech—will make the council tax acceptable. We are seeing the beginnings of a revolt against that tax and, as responsible politicians, we must begin to address that before the revolt happens, rather than after, as the Tories did with the poll tax.

We have heard interesting speeches during the debate, but I do not know what we can say about Des McNulty's speech. He cantered through it so quickly that it was difficult to keep up. However, he obviously triggered a response in at least two members. Stewart Stevenson called him a cavalier and John Swinburne called him a contender. I must say that Des McNulty appears most unlikely for both those roles. However, you never know.

Tavish Scott said, "We will do these things as we do them"—whatever that means. At least we extracted a promise from him to set up the review before the recess. However, he proceeded to extol the virtues of the council tax. One wonders why Tavish Scott is a member of the Liberal Democrats at all. Their Scottish manifesto said:

"Replace council tax with a local income tax related to ability to pay."

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

I am sorry, but I do not have time to give way.

The Liberal Democrats' manifesto did not say that the council tax should be reviewed but that it should be replaced. Further, the Liberal Democrats' spokesman in the House of Commons, Edward Davey MP, said at a party conference:

"Britain's whole tax system is riddled with unfairness. It's frankly astounding that after six years of a Labour Government, the state takes relatively more in tax from our country's poorest, than it takes from the richest."

What is even more astounding is that, in the Scottish Parliament, the Liberal Democrats actively help the state to do that.

The other Liberal Democrat speaker, Iain Smith, outlined clearly all the problems with the council tax and all the advantages of the local income tax. The problem is that he has no plans for the delivery of the local income tax. He wants to set up a convention to talk about it. That is excellent. I hope that we live long enough to see the results, but I have my doubts.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

Sit down, sit down.

The fact is that since Labour came to power in Scotland we have had a 50 per cent rise in the council tax. Therefore, doing nothing is not an option.

The Executive promised a review, but it has not even set up the review yet. We have now been given a start date. That is, we were given a range of time during which there will be a start date. However, we were not given an end date and we certainly were not given a commitment to implement the review's conclusions. Since 1954, Governments have set up countless reviews of local government taxation and they all reported back in the same way, which was the way that the Government of the day wanted, by kicking the issue into the long grass and doing absolutely nothing about it. That is a classic fudge and Scotland deserves much better that that.

The previous local government tax brought down Mrs Thatcher and we were all glad that that happened. There is a great danger that the current local government tax will bring down the pathetic apology for an Administration that is the Executive. I look forward to that happening—the sooner, the better.