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Last Updated: Wednesday, 14 March 2007, 17:01 GMT
SNP planning to scrap council tax
Tax bill
The SNP claims the tax plans would lead to lower bills
The Scottish National Party plans to scrap the council tax and replace it with a fixed additional tax on income.

BBC Scotland has learned that all local authorities would be obliged to levy an extra charge of 3p in the pound on income, with no local variation.

SNP leaders said the move would get round the complaint that the system would be too complex for employers to implement.

Scottish Labour said the plan still amounted to a tax on jobs.

Under the SNP plan, the council tax levied on property would be scrapped altogether.

Tax 'cut'

Instead, taxpayers would be charged 3p extra in the pound on their earned income, at starting, basic and upper rates.

This would apply in the same way across every council in Scotland.

SNP leaders said the move would represent a tax cut for everyone except the top 10% of wage earners, because it would levy less than the council tax.

The party would transfer 450m from Scottish Executive funds to compensate local authorities.

It said the proposal had been independently assessed and low and middle income families would be better off, with 500,000 pensioners paying nothing to councils because they would not be liable for income tax.

This represents the biggest tax cut in a generation
Nicola Sturgeon
SNP deputy leader

SNP deputy leader Nicola Sturgeon said: "This represents the biggest tax cut in a generation and is directed to particularly benefit pensioners and middle Scotland."

Nationalists claim that it would see taxpayers on low and middle incomes benefit on average by between 260 and 350 a year.

Ms Sturgeon said the crossover point at which people would be worse off under the SNP would be about 33,000 for a single earner or 64,500 for a two-income couple.

Under the plans, council tax would first be frozen at 2007-08 levels until a local income tax was implemented in two or three years' time.

Stuart Adam, a senior research economist at the Institute for Fiscal Studies (IFS), said: "The SNP is proposing to cut taxes and spending and virtually eliminate local councils' ability to decide their levels."

The SNP's political opponents attacked the plan.

'Hard-working families'

A Labour spokesperson said: "A local income tax represents a tax on jobs, and as the independent Burt review of local authority finance shows, would be a disincentive to work.

"The SNP claim the local income tax will redistribute income but in fact they will shift the entire tax burden onto Scots in work.

Scottish Conservative finance spokesman Derek Brownlee said: "Even independent experts don't think they have credibility on their tax and spending plans.

"Local income tax would hammer hard-working families, small businesses and pensioners."


SEE ALSO
Council tax rises below inflation
08 Feb 07 |  Scotland
Scotland's council tax bills 2007
08 Feb 07 |  Scotland
Labour attacks SNP over tax plans
05 Jan 07 |  Scotland
'Replace council tax' says report
09 Nov 06 |  Scotland

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