Tax Row and the LIT

Parliament yesterday was completely dominated by the tax row as MSPs lined up to condemn John Swinney for not informing Parliament that tax-system payments had been withheld from HMRC. This makes the Scottish Variable Rate (SVR) of Income Tax uncollectable, even if anyone wanted to.

Let me say, that in my book, John Swinney is the most competent minister in the Cabinet. Everyone, especially UNISON, give finance ministers a hard time even when times are good. John Swinney has the least enviable job in government at the present time, coupled with a huge portfolio of responsibilities - the minister for everything as he is known. Despite this he is a fair person to do business with, a skilled debater and I would certainly not question his integrity. On this occasion his defence that the money could have been used better, simply missed the point, and I think he realised that by the end of the debate. This is Parliament's power and it is not for any government, especially a minority one, to take away.

But there is another point arising out of this political storm that hasn't been given any coverage. Whilst the Scottish Government may have had no intention of using the SVR, they did tell us that they wanted a Local Income Tax. More than that, they spent a lot of money working up their plans, issuing consultation papers and the like. A Local Income Tax would also need an up to date database of Scottish tax payers, a point we made during the consultation. I was always sceptical about the Government's real commitment to this change in local taxation. It always looked more like a political strategy to attack Labour over an unpopular tax. Now we know that they had no real intention to introduce a Local Income Tax.

On the subject of the Council Tax I would recommend reading Professor David Bell's paper to the Finance committee on the budget and in particular the section (p10+) on who benefits from the Council Tax freeze. He makes the point that the freeze is neither fair or supports economic growth. A point reinforced yesterday when the Irish Government introduced a property tax for the first time. UNISON has always argued for a basket of taxation and that if we didn't have a property tax, we would probably have to invent one. Well the Irish have just found that out.

David Bell's recommendation is "that the Finance Committee might consider whether the benefits of the council tax freeze outweigh its costs in terms of the services not delivered by local government or by other public bodies due to lack of funding." Absolutely spot on.