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Nationalist pledge on council tax More funds allocated to councils
(about 15 hours later)
The Scottish National Party has pledged to freeze council tax levels if it wins next year's Holyrood elections. Local authorities have been warned not to introduce major council tax hikes next year after securing a cash handout from ministers.
The party's deputy leader, Nicola Sturgeon, promised to cap council tax for two years, until a new system of local income tax is introduced. Finance Minister Tom McCabe announced that councils are to receive a 4.7% increase (£393m) on last year's funding levels from the Scottish Executive.
Ms Sturgeon has written to SNP councillors outlining the new policy. This includes £201m in new money, with additional revenue resources of £140m.
But Finance Minister Tom McCabe and Conservative finance spokesman Derek Brownlee have hit out at the Nationalists' council tax plan. The increases were welcomed by local authority body Cosla, which hailed it as a victory.
Mr McCabe is preparing to unveil details of next year's funding package for Scotland's local authorities and he believes the SNP proposals would create a huge gap in council finance However, Mr McCabe warned that councils faced losing out on future funding increases if they failed to meet a series of assurances on issues including efficiency savings and free personal care.
In November a report into local taxation in Scotland said the council tax should be replaced with an annual charge based on property value. He said that central to that was a commitment to minimising council tax rises.
The "A Fairer Way" report by the independent local government finance review committee said the tax should be based on about 1% of a home's value. If we were in a position where a council was to increase its council tax by 10%, then we would take action on that Tom McCabeFinance Minister
We shall use existing powers to place a ceiling on the level of council tax in every local authority across Scotland Nicola SturgeonSNP Deputy Leader The minister said he wanted to see councils doing "better than last year" when the next levels are set in April.
The formula was rejected by First Minister Jack McConnell and the main parties. "There's certainly a threat that if the different elements of discussions we held with them over the past few months are not met, then we would revisit our discussion with regard to funding," he said.
The SNP plan would mean charges would be frozen after any increases which are imposed next year. "If we were in a position where a council was to increase its council tax by 10%, then I've said before and I'll say again we would take action on that."
On Wednesday, she pledged: "Under an SNP government the April 2007 increases will be the last of the Labour-inspired council tax increases." But he said that if councils are meeting these conditions, then the additional revenue resources of £140m will be included in future local government budgets for 2008/09 and beyond.
Ms Sturgeon said the party's proposals to abolish council tax and replace it with a system of local income tax would be a key part of its campaign at next year's council elections, which are taking place on the same date as the Holyrood poll. Business rates
She added: "Because of the inherent unfairness of the current local taxation system for the majority of Scots, we plan to make the abolition of council tax central to our local government campaign." Council tax rises averaged 3.2% across Scotland this year.
In her letter to SNP councillors, Miss Sturgeon said more than 500,000 pensioners who do not pay income tax would not pay anything under the party's local income tax proposals. Cosla president Pat Watters said the announcement was a "major win" for Cosla and the result of the "new mature partnership" between local and central government.
'Last ever' "It is also justification for the amount of hard work and effort put into the process by Cosla on behalf of Scottish local government during the last two years," he said.
And she added that families on low and middle incomes would also benefit from the switch. Pat Watters said the increase was a "major win" for Cosla
Ms Sturgeon said: "After years of Labour increases in council tax, local tax payers deserve a break. On free personal care, Mr McCabe said that ministers and councils will work together to establish what is being spent so people across Scotland receive the same high standard of service.
"That is why the SNP will ensure that the increase in council taxes in April 2007 will be the last ever increase in the council tax. But the SNP's John Swinney said councils should be allowed to keep money from efficiency savings, allowing them to freeze council tax rates - something the SNP pledged to do.
Nicola Sturgeon has written to SNP councillors on the matter He warned that if it did not happen Mr McCabe would "preside over yet another punishing increase in the council tax".
"We shall use existing powers to place a ceiling on the level of council tax in every local authority across Scotland. The minister also announced that, from April next year, business rates will be cut to bring Scotland in line with the position in England.
"The level of council tax will therefore remain frozen for the two years that it will take to introduce a fairer local income tax based on the ability to pay." The minister added that the small business rate relief scheme would continue in its present form.
Mr Brownlee said SNP plans to freeze council tax come less than a month after the party's Moray MP, Angus Robertson, said the tax burden in Scotland would not have to be "raised significantly" after independence. Tory finance spokesman Derek Brownlee welcomed the reduction but added: "Can he perhaps confirm how much extra Scottish businesses have paid in business rates as a result of his executive's decision to increase business rates in the first place - is it around £1bn?"
"This is more fantasy politics from the SNP, who only two weeks ago were promising higher taxes for Scotland," Mr Brownlee said.
It is believed that Labour ministers still favour a form of property tax but with reforms which would see additional bands added to the present council tax.