Wednesday, 9 April 2008

May I Offer a Couple of Suggestions Mr Salmond

Oh dear the SNP's palns to set their 'local' income tax LIT centrally at Holyrood has run into the buffers at the Treasury.

Apparently the SNP trying to control the ammount set central as well as using the Inland Revenue to collect the taxation throws it outwith the powers devolved to the Scottish Parliament.

Of course there are alternatives. One is to maintiain the local link by allowing council to set their own rate of LIT. This is of course one of the key differences between Liberal Democrat proposals and those that the Nats took up once they realised it was a pretty neat idea. It would maintain the local level, the collection issue is probably less of an issue for the Treasury than the loss of setting the rate.

So I'm offering Alex Salmond and his Finance Minister John Swinney, these sage pieces of advice. First take on the Lib Dem local accountability element for LIT and not set it from your offices in Holyrood, local taxes have always been set by the local authorities who need to fund their spending from that revenue. Second if you don't want to do that you're more that welcome to join the other parties to get more power and greater fiscal autonomy by revisiting the Scotland Act.


  1. Hi Stephen,

    In the space of a few days, we've moved from the 'Treasury' saying that Holyrood doesn't have the power to introduce LIT full stop, to the present position that it can't be done unless local variation is allowed.

    10/10 for effort. Trouble is, nowhere in the Scotland Act does it define the word 'local'. As such, the portion of tax raised directly to fund local authorities, just as is the grant support from Central government and Council Tax benefit, remains entirely under the control of Holyrood as things stand.

    I'd like to see local authorities be able to set their own rates. However, isn't there merit in setting it centrally, at least for the first few years, just until the system settles down?



  2. Interesting points Richard I never liked the SNPs proposal to take it out of local authorities hands in the first place. Thus removing the responsibility and accoutability for spending from the authority setting the amount of revenue coming in.

    Also the 3p rate can hardly have been set purely by chance as this is the upper limit that Holyrood could adjust income tax by under the Scotland Act. It always had looked like an SNP attempt to flex their muscle in the ring against the Treasury.

    But it also is just another recent example of the SNP not trusting the next layer of governance to do their job, even though they themselves are not the top layer.

  3. Thanks for the response, Stephen, though I'm a wee bit disappointed that you took it as a chance to have a swipe rather than answer the question :-)

    It always had looked like an SNP attempt to flex their muscle in the ring against the Treasury.

    How so? The SNP plan was never to use the 3p basic rate power. It was always to collect a flat 3p across all income bands - 3p just happened to coincinde with the amount required to collect the same amount as Council Tax plus Council Tax benefit, plus efficiency savings.

    But it also is just another recent example of the SNP not trusting the next layer of governance to do their job, even though they themselves are not the top layer.

    You've lost me here, I'm afraid. The criticism of the SNP over the concordat has been that we're giving local authorities too much autonomy in how they spend and account for their revenues, not that they've been given too little control. All were free to opt out of the council tax freeze if they so chose - that fact that none did is probably testament to the fact that the local government settlement represented an increase in the share of national funding, in both real and absolute terms, for the first time in many years.

    I agree with you that local authorities should be allowed to set their own rates. I just think that there may be an advantage to setting the rate nationally, just until the new system settles down. What say you to that point?

  4. In light of the reaction of the SNP in response to the rate being rejected, I'm sadly drawn to the conclusion that the 3p rate was chosen exactly because if there was any other issue they would argue the tax raising power issues and head for some sort of stand off. If I'm incorrect that certainly hasn't been the way it has appeared since the Treasury issued its statement.

    As for the point we agree on what about the old adage No taxation without representation. With one group setting the taxation and another one having the responibility for spending what they have just whom at the ballot box will suffer; those who maybe don't set a high enough level, or those who may be hand tied by the amount they are handed. The average voter may confuse the reasons for what is going on locally.

    As for the lack of trust in the next level of governance it is the way some planning applications have been called in from local authorities. Now I'm not saying that I'm detecting a pattern in the ones that have been, but there is somewhat. Trumpgate has merely been the most public one.