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Last Updated: Tuesday, 11 March 2008, 18:50 GMT
'Challenging' local tax unveiled
John Swinney
John Swinney said it was time to end the "unfair" council tax
Plans to replace the "unfair" council tax with a local income tax have been published by the Scottish Government.

Finance Secretary John Swinney said passing the plans for the 3p charge would be "challenging".

The minority Holyrood administration needs the backing of rival parties to pass the plans - and the UK Government's support to implement them.

Labour claimed the proposals would make workers in Scotland the highest taxed in the UK.

Ministers hope to introduce the plans in 2011/12, around the time of the next Scottish Parliament election.

The Scottish Government has been seeking support for the local income tax from the Liberal Democrats, who want councils to be able to set rates.

The proposals - opposed by Labour and the Tories - would see the tax rate applied to income falling under the basic and higher rates of UK income tax.

Single household, salary 20,000 - 443
Single household, salary 33,675 - 854
Single household, salary 62,000 - 1,703
Source: Scottish Government

There would be exemptions for savings and investment income, while a tax for second homes would broadly stay in line with the current arrangements.

It is hoped the new tax, if passed by parliament, would be collected through the existing PAYE system and self assessments.

Mr Swinney claimed that under the new system more than four out of five households would be better or no worse off.

"The council tax is unfair, regressive and penalises people on low incomes," said the finance secretary, whose government has just delivered a council tax freeze.

"The people of Scotland will be better off paying a fairer, local income tax, based solely on the ability to pay."


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The local income tax plans, now part of a four-month consultation, were criticised by Scottish Labour leader Wendy Alexander.

Ms Alexander said: "This Scottish jobs tax will hit the pay packets of every hardworking Scot.

"There is nothing fair about the super rich getting off Scot free.

"And nothing just about making hardworking Scots pay at least 15% more in income tax than the rest of the UK."

Tory finance spokesman Derek Brownlee called for a reformed council tax.

He said: "Under our plans to reform the council tax and cut it, 100% of council tax payers will see a reduction in their bills."

Aberdeen - 1,230
Glasgow - 1,213
Dundee - 1,211
Dum and Gall - 1,049
Orkney - 1,037
Western Isles - 1,024

But Lib Dem finance spokesman Tavish Scott said the consultation was a "significant milestone" in ditching the council tax.

Mr Scott said: "At our meeting yesterday evening, the cabinet secretary for finance and I agreed that the opportunity to build a parliamentary majority in favour of change and overcome the Labour and Tory supporters of council tax made our continued discussions worthwhile."

CBI Scotland director Iain McMillan said: "Higher levels of income tax in Scotland will send the wrong message to people in England and overseas about Scotland's tax regime because Scotland's effective basic and higher rates of tax will be the highest in the UK."

Chancellor Alistair Darling has also said Scotland would lose out on 400m in council tax benefit if the charge was scrapped, but the Scottish Government has insisted the cash is "part and parcel" of the country's funding package.

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