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Last Updated: Wednesday, 30 May 2007, 16:51 GMT 17:51 UK
Government to scrap council tax
Council tax bill
The SNP's plan to scrap council tax was a key election pledge

The Scottish government is to press ahead with plans to replace council tax with an income-based alternative.

However, the move may struggle to gain parliamentary approval with opposition from Labour, the Liberal Democrats, Greens and Conservatives.

Finance Secretary John Swinney said he would also aim to freeze council tax rates from April 2008 as a first step.

The SNP's plans for a local income tax were branded a "threat" by Labour finance spokeswoman Wendy Alexander.

The Lib Dems said they wanted individual councils to be able to vary local income tax, as opposed to the SNP's fixed 3p levy across Scotland.

Mr Swinney set out his aim to parliament as part of a drive to raise Scotland's growth rate to UK levels by 2011.

There was more support for an announcement to remove or reduce rates for smaller businesses.

Whether this government means business we will need to wait and see
Derek Brownlee MSP
Conservative finance spokesman

"The government will bring forward legislation to abolish the unfair council tax," he told MSPs.

"Our proposal is for a local income tax based on the ability to pay which will reduce the overall burden of local tax with the benefit felt by pensioners, families and the majority of Scots.

"We stood for election on a platform to abolish the unfair council tax and we are determined to deliver this as part of our agenda to create a wealthier and a fairer Scotland."

Ms Alexander said the SNP's promised local income tax was "by far" the biggest threat to companies in Scotland.

"Not only would Scotland become the highest-taxed part of the UK - we would create a specific disincentive to work in Scotland," she said.

"Frankly, the Scottish economy can do without it."

'Out of control'

Tory finance spokesman Derek Brownlee said of the Nationalists' plans to reduce business rates for smaller firms that his party had also put forward its own proposals on the issue.

"Whether this government means business we will need to wait and see," he said.

"But if they can reduce business rates next year we will be very, very strongly supportive."

Lib Dem finance spokesman Tavish Scott pointed out that there was broad support for bringing back trams to Edinburgh and also for building a rail link to the capital's airport, adding: "The first minister cannot describe the need for consensus on one hand and ignore it on the other."

Mr Scott also challenged the government to produce advice they had that led transport minister Stewart Stevenson to claim "costs were running out of control" for the projects.

"I do hope the government can absolutely demonstrate what advice Mr Stevenson got to make that remark in public," he said.


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