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Talks over scrapping council tax Frosty response to local tax plan
(about 3 hours later)
Talks have taken place between the Scottish Government and the Liberal Democrats over scrapping the council tax in favour of a local income tax. UK revenue bosses have given a frosty initial response to suggestions they could run the collection of Scotland's planned local income tax.
The top level meeting, which took place at the Scottish Parliament on Thursday, has been described as "constructive". The Holyrood government is committed to replacing the council tax with the new alternative, set at a standard 3p rate.
The SNP is committed to replacing the council tax with a local income tax set at 3p. HM Revenue and Customs told BBC Scotland it operated the reserve central tax system, not a local one.
Further detailed talks are expected to take place on Monday, ahead of the publication of a consultation document. But Scottish Finance Secretary John Swinney said detailed discussions were still to take place.
First Minister Alex Salmond and Finance Secretary John Swinney met Lib Dem leader Nicol Stephen and Lib Dem finance spokesman Tavish Scott. The Scottish Government will launch a consultation on its plans within the next few days.
Tax options Ministers have also held "constructive" talks with the Liberal Democrats - who also want to scrap council tax - on gaining their support.
It came just days after Mr Stephen challenged the first minister to enter into talks. There is a lot of discussion to be undertaken John SwinneyFinance Secretary
The Conservatives branded the talks a waste of time and called for reform of the council tax. The minority Holyrood government needs support to get the plans through parliament, but the Lib Dems said they wanted to give councils the powers to set tax.
Finance spokesman Derek Brownlee said: "All the effort that is going into talking about versions of local or national income tax hikes would be much better spent on reforming the council tax - that could be done in a matter of months, not years." Mr Swinney told BBC Scotland's Politics Show he was working on the assumption that a co-operative arrangement with HM Revenue and Customs could quickly and efficiently establish and collect the local income tax.
Labour local government spokesman Andy Kerr said: "The SNP and Lib Dems are like the two ends of a pantomime horse, each pulling in a different direction and neither knowing which way to go next." But the UK department said it operated the reserved central government tax system, not a local tax system, adding that it was a matter for the Scottish Government if they wished to introduce a local income tax using their own powers.
The task is to turn overwhelming public support into a parliamentary majority John SwinneyFinance Secretary Mr Swinney said the forthcoming consultation was the correct way to proceed, adding: "There is a lot of discussion to be undertaken with revenue and customs and revenue and customs will be consulted."
Mr Kerr added: "The SNP cynically promised the Scottish electorate that they could deliver existing service levels on a 3p rate but Labour has consistently pointed out that their sums don't add up." He went on: "I hope they are willing to assist us in this particular initiative, because it would be an efficient way to go about the collection of the local income tax."
The SNP favour a centrally set local income tax, while the Lib Dems want it set at a local level. 'Pantomime horse'
Reports suggest a compromise may be being considered to propose a centrally set tax which could evolve to have responsibility passed to local authorities. Mr Swinney also said the UK Government was "just plain wrong" on the issue of withholding £400m of council tax benefits, should the system be scrapped in Scotland.
A spokesman for Mr Swinney indicated the two parties found much common ground. Westminster ministers argued that, if the tax went, the benefit would have to go as well, but Mr Swinney said the Scots administration was entitled to the cash under the UK Treasury financial settlement.
He said: "The meeting was very constructive. It is clear that our agreement about the need to scrap the council tax in favour of a fair local income tax based on ability to pay far outweigh the differences. Meanwhile, Labour and the Conservatives rubbished the SNP/Lib Dem talks.
"The Scottish Election Study last year showed that 88% of Scots favour a local income tax and only 12% back the discredited council tax. Tory finance spokesman Derek Brownlee said: "All the effort that is going into talking about versions of local or national income tax hikes would be much better spent on reforming the council tax - that could be done in a matter of months, not years."
"The task now is to turn that overwhelming public support into a parliamentary majority and the discussions with the Lib Dems are hopefully the beginning of that process." Andy Kerr, Labour's local government spokesman, added: "The SNP and Lib Dems are like the two ends of a pantomime horse, each pulling in a different direction and neither knowing which way to go next."
A deal between the SNP and Lib Dems would still leave the government two votes short of a majority of 65 MSPs in the parliament. A deal between the SNP and Lib Dems would leave the government short of a majority of 65 MSPs in the parliament which could come from the Green Party, which supports a land value tax.
This could come from the Green Party, but they support a land value tax.