Local Income Tax
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Several political parties have advocated a local income tax in Scotland as an alternative to the Council Tax, as part of funding for
local authorities Local government is a generic term for the lowest tiers of governance or public administration within a particular sovereign state. Local governments typically constitute a subdivision of a higher-level political or administrative unit, such a ...
. Various proposals were promoted during the 2007 general election campaign.


Proposals

In 2004, the
Scottish Socialist Party The Scottish Socialist Party (SSP) is a Left-wing politics, left-wing political party campaigning for the establishment of an Scottish independence, independent Socialism, socialist Scottish Scottish republicanism, republic. The party was fou ...
launched a "Scrap the Council Tax" campaign, boosted by a poll suggesting 77% of Scots supported the abolition of the tax. A bill proposing a progressive system of taxation based on a household's income was presented in 2005, but was defeated with 12 MSPs in favour, 94 against, and 6 abstaining. Although the SNP and the Liberal Democrats supported the principle of income-based taxation, they disagreed with the SSP's specific proposals, which would have exempted anyone with an annual income of less than £10,000 and reduced liabilities for anyone with an annual income of less than £30,000, while targeting revenue generation to household incomes in excess of £90,000. Different proposals to abolish council tax formed part of the
manifesto A manifesto is a written declaration of the intentions, motives, or views of the issuer, be it an individual, group, political party, or government. A manifesto can accept a previously published opinion or public consensus, but many prominent ...
s of the
Scottish National Party The Scottish National Party (SNP; ) is a Scottish nationalist and social democratic party. The party holds 61 of the 129 seats in the Scottish Parliament, and holds 9 out of the 57 Scottish seats in the House of Commons of the United Kingdom, ...
and the Liberal Democrats during the Scottish Parliament general election of May 2007. The SNP version involves the centralised distribution of funds raised from the new tax throughout the Scottish local authorities whereas the Liberal Democrats' proposal devolves the distribution to individual authorities. The SSP said under its proposals, unlike other local income tax schemes, the set-up costs and problems of fiscal flight would be insignificant, as the tax rates are not set locally. After the 2007 election, the SNP-run
Scottish Government The Scottish Government (, ) is the executive arm of the devolved government of Scotland. It was formed in 1999 as the Scottish Executive following the 1997 referendum on Scottish devolution, and is headquartered at St Andrew's House in ...
planned to bring forward
legislation Legislation is the process or result of enrolling, enacting, or promulgating laws by a legislature, parliament, or analogous governing body. Before an item of legislation becomes law it may be known as a bill, and may be broadly referred ...
to replace Council Tax with a local income tax as part of the funding for Scottish local authorities. A major setback took place when the
UK government His Majesty's Government, abbreviated to HM Government or otherwise UK Government, is the central government, central executive authority of the United Kingdom of Great Britain and Northern Ireland.
said it would withhold almost £400 million in Council Tax Benefit if the Scottish government implemented the proposals. Controversially, the UK government said it would, however, release the funds for a tax scheme designed by Scottish Labour.


See also

*
Business rates in Scotland Business rates is the commonly used name of Non-Domestic Rates (tax), Rates in Scotland, a tax on occupation of non-domestic property. Rates are a property tax used to fund Local government in Scotland, local services that dates back to the Poor L ...
* Tartan tax *
Taxation in the United Kingdom In the United Kingdom, taxation may involve payments to at least three different levels of government: Government of the United Kingdom, central government (HM Revenue and Customs), Devolution in the United Kingdom, devolved governments and Loc ...
*
Income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
*
Local taxation A comparison of tax rates by countries is difficult and somewhat subjective, as tax laws in most countries are extremely complex and the Tax incidence, tax burden falls differently on different groups in each country and sub-national unit. The l ...
* Council Tax *
Land Value Tax A land value tax (LVT) is a levy on the value of land (economics), land without regard to buildings, personal property and other land improvement, improvements upon it. Some economists favor LVT, arguing it does not cause economic efficiency, ec ...


References

Scotland Scotland is a Countries of the United Kingdom, country that is part of the United Kingdom. It contains nearly one-third of the United Kingdom's land area, consisting of the northern part of the island of Great Britain and more than 790 adjac ...
Scotland Scotland is a Countries of the United Kingdom, country that is part of the United Kingdom. It contains nearly one-third of the United Kingdom's land area, consisting of the northern part of the island of Great Britain and more than 790 adjac ...
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