Alex Salmond has proposed a local income tax to replace council tax in Scotland, and he is courting the LibDems to support him on it.
The main reason local income tax is a bad idea is that it puts too much pressure on a small band of people - workers.
In the UK as a whole, we have 62 million people, of whom 29.56 million people work i.e. 47% of the population support the other 53% (the bulk of whom are pensioners, the next largest group is children, followed by housewives, the sick and the unemployed). Income tax and national insurance on this group already raise the lions share of tax money. The rest of tax is spread on the whole population except children - VAT, fuel duties, alcohol and cigarette duty, council tax.
What Salmond is proposing is to take the council tax (which falls on a wide range of people) and dump it all on the workers (a smaller group who are already burdened).
You can see straightaway what will happen if demographics change and the pensioner group increases - the local income tax will have to rise to meet the bill, while the old in comfortable houses live off the backs of the young.
Salmond proposes to get round this by saying that the local tax will be fixed at 3% and will not rise - and he hopes to make up the difference by asking for a subsidy from the Department of Work and Pensions of £400 million. The DWP currently pays this to Scotland as council tax rebates for lower income people. But of course if you abolish the council tax, then you abolish the rebate and there is nothing to pay. And in any case why should central govt subsidise such a mad scheme? The DWP is right to say NO.
Also, the SNP are supposed to want Scotland to be independent - what on earth are they doing proposing schemes that will only work if they get a subsidy from England and Wales?
Of course the LibDems are daft enough to go along with this and vote with the SNP in the Scottish Assembly.
What scuppered Margaret Thatcher's poll tax was the way the money levied per person kept ballooning. The local income tax will be the same - they'll start with 3% and end up having to raise the rate sharply as demographics change
The main reason local income tax is a bad idea is that it puts too much pressure on a small band of people - workers.
In the UK as a whole, we have 62 million people, of whom 29.56 million people work i.e. 47% of the population support the other 53% (the bulk of whom are pensioners, the next largest group is children, followed by housewives, the sick and the unemployed). Income tax and national insurance on this group already raise the lions share of tax money. The rest of tax is spread on the whole population except children - VAT, fuel duties, alcohol and cigarette duty, council tax.
What Salmond is proposing is to take the council tax (which falls on a wide range of people) and dump it all on the workers (a smaller group who are already burdened).
You can see straightaway what will happen if demographics change and the pensioner group increases - the local income tax will have to rise to meet the bill, while the old in comfortable houses live off the backs of the young.
Salmond proposes to get round this by saying that the local tax will be fixed at 3% and will not rise - and he hopes to make up the difference by asking for a subsidy from the Department of Work and Pensions of £400 million. The DWP currently pays this to Scotland as council tax rebates for lower income people. But of course if you abolish the council tax, then you abolish the rebate and there is nothing to pay. And in any case why should central govt subsidise such a mad scheme? The DWP is right to say NO.
Also, the SNP are supposed to want Scotland to be independent - what on earth are they doing proposing schemes that will only work if they get a subsidy from England and Wales?
Of course the LibDems are daft enough to go along with this and vote with the SNP in the Scottish Assembly.
What scuppered Margaret Thatcher's poll tax was the way the money levied per person kept ballooning. The local income tax will be the same - they'll start with 3% and end up having to raise the rate sharply as demographics change
SNP's local income tax idea | 26 comments (26 topical)
SNP's local income tax idea | 26 comments (26 topical)
