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Only one reason is needed to justify a local income tax – greater fairness



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Published Date: 08 September 2008
There may be 25 so called difficulties that need to be overcome, but there is one reason why the tax system must be changed (your report, 4 September). And that is that it remains unfair and unreasonable.
This overrides all the other issues. Nobody criticising local income tax has offered any useful proposals or suggestions that resolve this most basic of flaws. If only the complainers put their energy into making council funding fair instead of creat
ing or imagining obstacles then this issue could be resolved at a stroke. The proposed local income tax comes out of a logical analysis to ensure that people pay a fair and equable proportion of their disposable resources. This means measuring those resources which means income. Yes there will be difficulties and things will have to be amended and adapted as in any project or change, but there is no moral justification for retaining the status quo.


NICK COLE

Balmacron Farmhouse

Meigle, Perthshire

Surely, it is patently obvious that a property tax, where the owner of the big house pays more than the owner of the low value property, is perfectly fair and reasonable. Surely it is also perfectly fair and reasonable to expect everyone who uses local services to contribute to their cost. Surely it is obvious that if you switch to LIT it means only people who are working will pay. This means that pensioners, 50 per cent of whom are quite well able to pay and, probably, quite willing to do so, get off scot free. It also means that the wealthy who live off "unearned" income, avoid contributing. How can this possibly be fair or even sensible?

BRIAN CARSON

Belmont Gardens

Edinburgh


The Law Society does not, obviously, have a full grasp of HMRC PAYE. Taxation of income from more than one source is dealt with a system of special letter codes and is no problem for either existing software or those using the HMRC CD. It is concerning that such an august organisation has so little knowledge of our tax system. As someone who processes a payroll, I do not expect any real increase in administration and the fact that there is going to be no arrestment orders for non-payment of council tax is a positive step.

Hard pressed students would not have to pay anything unless they were earning more than £500 per month.

BRUCE D SKIVINGTON

Stapeley Avenue

Edinburgh

I am intrigued by the argument put forward by the Institute of Directors that the introduction of a local income tax would make Scotland the highest taxed part of the UK. The current SNP government has put forward a tax-cutting agenda, with a freeze in the council tax and big cuts in business rates. The proposed local income tax is also a tax cut as the Scottish Government will be investing £281 million to subsidise the new tax, money which is not available at the moment to subsidise the council tax.

ALEX ORR

Bryson Road

Edinburgh

We are again presented with the idea that local income tax is "a gift to the rich" (Letters, 6 September). I have seen no figures on how many of these millionaires we have who do no work but live purely on share dividends and inheritances. However, those with such resources will pay tax on share dealing, pay tax on share dividends, pay capital gains tax, and tend to buy more goods and services on which they pay tax.

The point is that no tax is perfectly fair; there will always be anomalies, but LIT is fairer for the vast majority of people.

NORMAN DRYDEN

West Savile Terrace

Edinburgh






The full article contains 621 words and appears in The Scotsman newspaper.
Page 1 of 1

  • Last Updated: 07 September 2008 8:29 PM
  • Source: The Scotsman
  • Location: Edinburgh
 
1

Backofthenet,

08/09/2008 00:21:54
The Lib Dems want local councils to decide the rate of LIT. The SNP wants a centrally-set rate of 3 per cent. In other words, the LibDems want a genuine local income tax.

2

Martinh,

08/09/2008 08:17:58
Nick Cole writes "Yes there will be difficulties and things will have to be amended and adapted as in any project or change, but there is no moral justification for retaining the status quo".

OK lets pin up some difficulties that MUST be sorted out in advance of introducing a LIT.

1. A 3p National Rate is not enough to raise equivelent money that the Council Tax currently does, so where is the shortfall to come from. The SNPs Alex Orr reveals (for the first time to my knowledge) that the Scottish Government is to allocate £281 million of the block grant to subsidise this, so we now know that the Government is deliberately trying to introduce a scheme that is financially dependent on subsidy. So that's £281 million less to be spent on other pressing social priorities.

2. How are water bills to be collected. Perhaps 20% of the average council tax bill, are they to be collected separately and as a flat charge (and thus remain regressive taxation) or are water bills to be absorbed into the 3p tax rate, thus further increasing the shortfall.

I am not arguing against LIT in principle, but the SNP must explain these and other fundamental questions. It just isn't good enough to justify a new form of taxation by simply repeating that it is fairer and more equitable than the current form of local tax revenue raising. Lets have some honesty and transparancy. If say a 5p rate is required to raise sufficient funding for local Government then we need to be told, in advance, and fully costed before change is enacted. Its no point letter writers looking forward to seeing their bills slashed if there are no home helps, care homes closed, no new schools or hospitals etc. etc. That would be a disaster from which we will all suffer one way or another.
3

Linda,

Edinburgh 08/09/2008 08:35:12
Even progressive Tories like Micael Portillo now supports LIT read his article in yesterday's Sunday Times online.

Meanwhile Labour and their Union lackies refuse to back plans that will greatly assist the lower paid as they hate the SNP more than caring for the lower paid.

NUS opposition to the Scottish Government’s LIT proposals is totally misguided.

A student would have to earn £10,500 a year or work or 33 hours a week at £6 an hour before they would pay a the equivalent of a weekly bottle of beer at a city centre bar in respect of LIT which is unlikely to come into force until 2011 but in the meantime the same student has to forego 13 bottles of beer every month to meet Gordon Brown’s doubling of the lowest tax band from 10p to 20p
4

SouthernSkye,

08/09/2008 08:41:45
So what IS fair?
Does the size of the property (or land for that matter) actually indicate that the occupier(s) use more local services than those of a smaller property?
A widow in a large family home uses more services than a widow in a small home? How so?
Do not the services used relate to the number of people per household?
A couple in a large house do not, by default, create more waste or use local services any more than a couple in a small house.

So, what IS the fairest way to tax for the local services?
For me it is that it should be a simple equation of people per household. But that was the Poll-Tax was it not?
There are always going to be winners and losers whenever "council tax" is changed.I have no opinion as to whether LIT is a good or bad thing, there is too much spin and little fact on the table at the moment. But let us float a few ideas here as to what is the fairest method.
I vote for a return to a XXGBP per adult per household.
What's your views?
5

Martinh,

08/09/2008 08:48:06
#3. You are still arguing about principles of fairness without answering the questions. Why is this? Do you know or care only about student beer consumption?
6

Toom,

08/09/2008 08:49:37
Mr Carson writes:-

"Surely, it is patently obvious that a property tax, where the owner of the big house pays more than the owner of the low value property, is perfectly fair and reasonable."

I bought my fairly average house 26 years ago - my salary was about £12,000. This, year, my current pension income is about £12,000. No, council tax at the current level is not fair and reasonable.

Mr Carson writes "if you switch to LIT it means only people who are working will pay. This means that pensioners, 50 per cent of whom are quite well able to pay and, probably, quite willing to do so, get off scot free."

That is news to me and every other pensioner in the land. Pensions are fully taxed as earned income. After personal allowance I pay 20%. My current council tax takes another 17% of my pension on top. That makes the total amount almost equivalent to paying income tax at the higher rate on a modest pension.

LIT means that pensioners will continue to pay, but will pay according to their ability to pay.
7

Martinh,

08/09/2008 08:58:40
#6. I actually think that you should be exempt from income tax altogether on a retirement pension of £12,000 if that is your only source of earned income. That is the real injustice in society, the tax threshold for low paid people, pensioner or working are nowhere near high enough.
8

Toom,

08/09/2008 09:05:41
Mr Carson writes "It also means that the wealthy who live off "unearned" income, avoid contributing. How can this possibly be fair or even sensible?"

Can we have details of how many people there are with such large resources and who pay no tax income tax from employment or personal pensions?
And what about those who made their investment from earned income on which they they paid tax. And those with investments, will pay tax on share purchase, share transfer, share dividends, interest on savings, capital gains. They will be more economically active and will pay more tax on goods and services.
They will be less likely to become dependent on state benefits in old age, and are disqualified from mean tested benefits.
And purchase of an up-market house by the wealthy incurs stamp duty, an upfront payment typically equivalent to 20+ years average council tax.
In short, they tend to be high net
tax contributors and to make little demand on state resources.

It should be of no great concern if there are people with sources of income
which will not be subject to extra taxation and who might also even get some
benefit from removal of council tax: they already pay adequately in other
way.

There will be anomalies in any tax - get over it - LIT is fairer for the vast majority.
9

Steven P,

edinburgh 08/09/2008 12:53:14
Further to the bashing that Mr Carson is taking -
'...a property tax, where the owner of the big house pays more than the owner of the low value property, is perfectly fair and reasonable.'
Does he propose that I offset my equally big mortgage against my house value, and pay council tax only on the net value of the house?
10

G,

dundy 08/09/2008 13:00:16
It is quite simple....if you don't pay income tax you won't contribute to LIT...this is a fact (unless the SNP have other plans that they haven't told us yet...or haven't thought about yet or at all!)
...if the SNP think that this is fair then they have to tell us why!
The idea that all pensioners are destitute and must be protected from paying anything is obviously wrong....
11

Toom,

08/09/2008 14:22:52
#10 as I've already pointed out in #6, pensions are taxed as earned income. Most pensioners with even small personal or employment pensions in addition to their state pension, pay income tax, and they will pay the additional local income tax. That will relate it to their ability to pay, rather than the present council tax, where those on anything more than modest income and savings get clobbered for the full whack, or only get a small reduction despite living on much reduced income.

Once again, LIT is fairer. Pensioners will pay, but it will now be fairly linked to their ability to do so.
12

Rudi Hucker,

Uddingston 08/09/2008 15:02:18
LIT is not necessarily fairer - many families may have much higher incomes than pensioners, but they're also usually paying mortgages, paying for their children, paying extra to go on holiday because they're tied to school holidays....and so on.

You could argue that better off families make less use of council services (benefits, social services, grants and so on), and so they should contribute less.

Anyone who's on a reasonable salary and has tried to get financial help with house repairs can forget it. However, the benefit junkies who infest our country (can work, can't be ar5ed) will get everything handed to them on a plate.
13

Cassandra,

08/09/2008 20:11:13
Before those who have no savings or investments get their underpants in an uproar, can I point out that when the self-employed make their tax returns, they have to declare any interest/dividends etc. on these, and so do pensioners whether they have a state pension only or both state and occupational pensions, so unearned income is taxed too. I don't imagine those with only unearned income will escape the LIT net.

 

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