IRRV Alert July 4 2008
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'Scotland on Sunday' article - Question mark over SNP's pledge to ditch council tax
Question mark over SNP's pledge to ditch council tax
Alex Salmond
THE SNP is set to ditch its key pledge to introduce a new Local Income Tax after deciding it could not afford the policy without a £400m grant from Westminster which UK Ministers are threatening to cut.
First Minister Alex Salmond will not table a bill at Holyrood on the new tax unless UK Ministers agree to transfer the grant up to Scotland.
The deadlock means that the council tax is likely to continue in Scotland, despite the Nationalist's claim at last year's election that they would scrap it.
The dispute revolves around the £400m a year which is sent up by the Department for Work and Pensions as council tax benefit, off-setting bills for low income families. The funds are paid directly to local authorities.
Work and Pensions secretary James Purnell said earlier this year that if Scottish Ministers wanted to scrap the council tax then the benefit would go as well, and added that they would have to pay for the LIT themselves. But the SNP had banked on the sum being handed over to its administration to keep the new tax at an affordable rate.
A source close to the First Minister said: "Unless the money's there, there will be no Bill."
A senior government source said: "We can't go ahead with a policy if it means Scotland would be £400m poorer."
With the tax credit funds - plus efficiency savings - SNP Ministers said they could keep the new tax to 3p in the pound. However, independent studies have suggested that a figure of 6p in the pound would be required if it was to meet the revenue currently received through council tax.
Ministers claim that 80% of households would be better or no worse off with LIT, but high earners would suffer.
Business groups such as the Scottish Chambers of Commerce, Institute of Directors and Institute of Public Finance, have acriticised it, although it has proved popular with some sections of the public.
The deadlock means that the council tax is likely to continue in Scotland, despite the Nationalist's claim at last year's election that they would scrap it.
The dispute revolves around the £400m a year which is sent up by the Department for Work and Pensions as council tax benefit, off-setting bills for low income families. The funds are paid directly to local authorities.
Work and Pensions secretary James Purnell said earlier this year that if Scottish Ministers wanted to scrap the council tax then the benefit would go as well, and added that they would have to pay for the LIT themselves. But the SNP had banked on the sum being handed over to its administration to keep the new tax at an affordable rate.
A source close to the First Minister said: "Unless the money's there, there will be no Bill."
A senior government source said: "We can't go ahead with a policy if it means Scotland would be £400m poorer."
With the tax credit funds - plus efficiency savings - SNP Ministers said they could keep the new tax to 3p in the pound. However, independent studies have suggested that a figure of 6p in the pound would be required if it was to meet the revenue currently received through council tax.
Ministers claim that 80% of households would be better or no worse off with LIT, but high earners would suffer.
Business groups such as the Scottish Chambers of Commerce, Institute of Directors and Institute of Public Finance, have acriticised it, although it has proved popular with some sections of the public.