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Plan to scrap council tax dropped | |
(1 day later) | |
The Scottish Government has dropped proposals to replace the council tax with a 3p local income tax. | |
The plan - one of the SNP's highest-profile policies - had failed to win enough support in parliament. | |
Opposition MSPs seized on the announcement, saying the policy was now totally discredited. | |
Finance Secretary John Swinney told MSPs the legislation to bring in local income tax would not be introduced until after the next Scottish election. | |
He admitted there was not enough parliamentary support for the plan. | |
But Mr Swinney also said the UK government efficiency savings drive, which he said would take £500m off the Scottish budget, would make the proposals difficult to bring in. | |
We cannot put together a stable majority to enable us successfully to steer detailed local income tax legislation through this parliament John SwinneyScottish finance secretary The Scottish Government said local income tax - a key pledge in the manifesto which won the SNP the 2007 election - was fairer than council tax, as it was based on ability to pay. | |
Labour finance spokesman Andy Kerr said the governemnt decision was the "biggest retreat in the history of the parliament" and claimed the Nationalists had been "elected on a false prospectus". | |
"I am pleased for the hard-working families of Scotland who won't have to pay this ludicrous tax," added Mr Kerr, whose party said it would make Scotland the highest-taxed part of the country. | |
"They made a promise to the people of Scotland they were going to abolish the council tax, they know their proposals are nonsense and therefore they have simply retreated on that basis." | |
Mr Swinney insisted local income tax, which ministers had wanted to introduce in 2011-12, would still leave two-thirds of Scots better off, and less than two out of 10 people at the top of the income scale paying "a little more". | |
But he added: "It would not be wise and, indeed, it would not be possible to introduce a tax reduction of the scale we propose in the face of such swingeing Westminster cuts." | |
'Very flawed' | |
The Tories said the wealthy who did not live off earned income would escape local income tax. | |
The party's finance spokesman, Derek Brownlee, said the policy was "very, very flawed", and called for immediate talks about reforming the council tax. | |
"We are perfectly happy to discuss reform of the council tax and I would now hope the government would now be receptive to such discussions, which would be in the broader national interests," he said. | |
"We do not accept the status quo is the right option." | |
The announcement came as the Scottish Government said it was providing cash to freeze council tax for the second year in a row and extend the policy to 2011-12. | |
Mr Swinney said Scotland's 32 councils would be given more than £11.8bn of funding in 2009-10, an increase of £658m on the comparable sums for the previous year. | |
The Lib Dems, who support local income tax, refused to back the Scottish Government's plan because the tax level would have been set centrally rather than by local authorities. | |
'Unfair' tax | |
Jeremy Purvis, the Liberal Democrat finance spokesman said the "perpetual freezing" of the council tax now seemed to be adopted SNP policy. | |
"It is a scandal," he said, adding: "As council tax is not progressive, nor is the perpetual freezing of council tax." | |
Explaining the decision, Mr Swinney said: "The parliamentary arithmetic means that, while we might get the support of the Liberal Democrats for our proposals to introduce a local income tax, the Labour and Conservative parties are united in their opposition. | |
"In short, we cannot put together a stable majority to enable us successfully to steer detailed local income tax legislation through this parliament." | |
The finance secretary went on: "The cabinet has therefore decided not to introduce legislation to abolish unfair council tax and replace it with local income tax until after the election in 2011." | |
The local income tax proposals also ran into trouble with the UK government, which refused to allow Scottish ministers to retain the £400m-a-year in council tax benefits paid to Scotland if the charge was scrapped. | |
UK revenue bosses also gave a frosty response to suggestions they could run the collection of Scotland's planned local income tax. | |
HM Revenue and Customs told BBC Scotland it operated a central tax system, not a local one. |
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