South Lanarkshire councillors reject local income tax plans

Jul 3 2008 by John Rowbotham, Hamilton Advertiser

PLANS to replace the council tax with a local income tax were last week given the thumbs-down by South Lanarkshire councillors.

They voted 30 to 21 in favour of modifying but not ditching the Council Tax. Nine councillors abstained.

The vote was in response to the SNP Government’s consultation on their proposal to reform local government finance.

At last Wednesday’s council meeting, councillors voted along party lines, with 29 Labour members plus independent Tommy Gilligan indicating their opposition to a local income tax.

The 21 SNP councillors raised the eyebrows of opponents by calling for a “review” of local income tax proposals rather than expressing outright support for the Nats’ flagship policy.

The nine abstentions comprised seven Conservative councillors, Liberal-democrat Eileen Baxendale and independent Bert Thomson.

Before casting their vote, councillors considered a seven-page report setting out the view of council officers.

It was produced by finance director Linda Hardie who said she had taken soundings from other departments.

Officers had come to the conclusion that the local income tax proposal should be rejected on grounds of “accountability, fairness, stability and predictability”.

They considered that local income tax would:

l “Cut at the heart of democracy” if councils were not given the chance to set it locally.

l Lead to resentment as income from sources such as savings, financial investments, and second homes would be exempt.

l Increase the burden on families with more than one working adult who are already paying income tax.

Income yield from local income tax would also be “less predictable” because of variations in the number of tax-payers and their level of income.

The report added: “It is acknowledged that the proposed local income tax will raise only around half of the revenue currently raised by Council Tax.

“The financial modelling assumes that the Council Tax Benefit monies will be retained and that efficiencies will meet the remaining gap.”

Officers felt it would be better to retain the Council Tax but increase the number of tax bands and, perhaps, change the system for collecting water charges, with Scottish Water taking responsibility for billing.

At the full council meeting, depute council leader Michael McCann moved that the report form the basis of the council’s response to the consultation.

Labour voted down attempts by the SNP to revise the officers’ response.

Councillor McCann then launched a scathing attack on his SNP rivals.

He said: "The SNP case for a local income tax has always been weak because its introduction would lead to a financial crisis in local government.”

Tory group spokesman councillor Graham Simpson said the local income tax proposals were “nonsense” and would “clobber hard-working families”.

He added: “It also does away with any pretence of local accountability, where spendthrift councils can be punished by voters and prudent ones rewarded.”.

Councillor Simpson said they were against increasing the number of Council Tax bands and believed Scottish Water should be “mutualised”.

SNP depute leader Graeme Horne said: “Labour and Conservative councillors need to bear in mind the extremely negative impact that the Council Tax has had over the years on people on low and fixed incomes across the country and how regressive and unfair the Council Tax has become, to say nothing of its unpopularity.

“The South Lanarkshire Labour and Tory alliance need to consider whether they really want to pursue their last-ditch defence of a discredited system."

l At their quarterly delegate conference in Aberdeen, the Convention of Scottish Local Authorities voted to support the Scottish Government’s plans for a local income tax. This was a surprise decision by a body for many years dominated by Labour.