Local Income Tax

Question Time — Scottish Executive — General Questions – in the Scottish Parliament at 11:41 am on 1st March 2007.

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Photo of John Home Robertson John Home Robertson Labour 11:41 am, 1st March 2007

To ask the Scottish Executive how much it estimates would be payable in local income tax by a household with two people earning average wages and how that compares with the average band D council tax in Scotland. (S2O-12223)

Photo of Tom McCabe Tom McCabe Labour

The report of the Burt committee shows that a rate of 6.5p in every pound would be needed to match the income raised by council tax. On that basis, estimates show that a couple on average earnings would pay approximately £883 more in local income tax than the current band D average.

Photo of John Home Robertson John Home Robertson Labour

Sixpence ha'penny in the pound, to use the old terminology. Am I right in thinking that it would cost a fireman and a nurse who were living in a band D house in East Lothian a very nasty £934 extra in tax every year if the Liberals or the nationalists had their way? Will the minister comment on the Liberal view that a fireman and a nurse are a rich family that can afford to pay more, and on the irony of the Liberals' and nationalists' opposing identity cards on civil liberty grounds while at the same time planning to give local councils access to people's bank accounts and employment records in order to calculate local income tax bills?

Photo of Tom McCabe Tom McCabe Labour

In the interest of limiting the decibel level in the chamber, I had better leave it to those parties to try to justify some of the statements to which Mr Home Robertson refers. No one is sure about the exact nature of any local income tax system, but there are questions about how, if it did not have discrete knowledge of the earnings levels in its local community, a local council would know what rate to set to ensure that it pulled in the same yield as other councils.

The Executive has pursued an agenda of stability and fairness in local taxation. That is why last year we produced the lowest average council tax since devolution and why this year the average increase in council tax is 1.8 per cent. I assure the chamber that a Labour-led Executive will continue to pursue stability, fairness and proportionality in local taxation. In my view, that will not include a local income tax.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

The problem is that the stability that the Labour Party pursues has seen Scotland have one of the lowest growth rates in western Europe over the past decade. Have the minister's officials advised him that, under the SNP's proposals, a couple who are each on the median wage would save £119.52 a year compared with what they will pay in band D council tax?

Photo of Tom McCabe Tom McCabe Labour

Under the SNP's proposals, as announced in the chamber, there is a black hole of at least £1 billion in the funding of local services. If we add to that the SNP's pre-announced alleged two-year freeze, there is a shortfall of between £1 billion and £1.2 billion for local services.

Many people in Scotland will have seen the BBC programme on Monday night that discussed the impact of dementia in our communities, which will increase dramatically in the years to come. Those who are affected by that terrible condition should think long and hard about what the impact of a £1.2 billion gap in the funding of vital local services would be for them.