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Local tax plans to be published Local tax plans to be published
(20 minutes later)
The Scottish Government is set to publish plans to scrap the council tax and replace it with a local income tax.The Scottish Government is set to publish plans to scrap the council tax and replace it with a local income tax.
The proposal, which faces substantial political opposition at Holyrood, may struggle to win MSPs' approval.The proposal, which faces substantial political opposition at Holyrood, may struggle to win MSPs' approval.
The local income tax is opposed by Labour and the Tories, while the Greens favour taxation on property. The 3p local income tax is opposed by Labour and the Tories, while the Greens favour taxation on property.
Finance Secretary John Swinney held talks on the issue with the Liberal Democrats on Monday, but they broke up without agreement.Finance Secretary John Swinney held talks on the issue with the Liberal Democrats on Monday, but they broke up without agreement.
Both parties agree in principle that change is necessary and both believe a local income tax is the favoured option.Both parties agree in principle that change is necessary and both believe a local income tax is the favoured option.
It is understood that the talks failed to reach an agreement because the SNP want all councils to levy a fixed 3p rate on income tax while the Lib Dems favour local variation.
'Wrong message''Wrong message'
It is understood that the talks failed to reach an agreement because the SNP want all councils to levy a fixed 3p rate on income tax while the Lib Dems favour local variation.
Meanwhile, the plans for a local income tax have been criticised by the director of CBI Scotland, Iain McMillan.Meanwhile, the plans for a local income tax have been criticised by the director of CBI Scotland, Iain McMillan.
The business chief welcomed the Scottish Government's move to freeze council tax but said the local income tax would lead to problems for the country.The business chief welcomed the Scottish Government's move to freeze council tax but said the local income tax would lead to problems for the country.
He 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.He 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.
HIGHEST AND LOWEST COUNCIL TAX BILL AREAS (BAND D) Aberdeen - £1,230Glasgow - £1,213Dundee - £1,211Dum and Gall - £1,049Orkney - £1,037Western Isles - £1,024 Council tax bills 2008
"It will hit income tax payers who currently do not pay the council tax, and it is not even clear at this stage if Scottish Ministers are empowered to require her Majesty's Revenue and Customs and UK employers to assess and collect local taxes on their behalf.""It will hit income tax payers who currently do not pay the council tax, and it is not even clear at this stage if Scottish Ministers are empowered to require her Majesty's Revenue and Customs and UK employers to assess and collect local taxes on their behalf."
A four-month consultation period will begin once the consultation document is made public.A four-month consultation period will begin once the consultation document is made public.
Chancellor Alistair Darling is insisting that Scotland would lose out on £400m in council tax benefit if it scrapped the charge.Chancellor Alistair Darling is insisting that Scotland would lose out on £400m in council tax benefit if it scrapped the charge.
However, First Minister Alex Salmond has insisted that this cash is "part and parcel" of the country's funding package.However, First Minister Alex Salmond has insisted that this cash is "part and parcel" of the country's funding package.
"There can be no possible case for removing some £400m of Scotland'smoney because we take a democratic decision to scrap the council tax and move to a fair system of local government finance," he said. "There can be no possible case for removing some £400m of Scotland's money because we take a democratic decision to scrap the council tax and move to a fair system of local government finance," he said.