Take Salmond seriously

Alex Salmond’s bold stroke to propose replacing council tax with an extra 3p on the basic rate of income tax is the real business of government the main parties in Stormont should turn to once they’ve got over their crisis of confidence and the other parties come out of deep freeze. Powers to raise taxes which Stormont doesn’t have but could bid for, matter far more to people’s real lives than the macho struggle over P&J. There are two ways of responding to Salmond’s gambit. One is to do what the Treasury foolishly did yesterday and threaten to withhold a £400 million payment to Scotland. This looks peevish. After all, it was New Labour which legislated to allow the Scottish government to do precisely what the SNP are proposing when they set up Home Rule in the first place. The Conservatives are cannier than the increasingly panicky Brown government and are prepared to enter the game. And it’s looking more and more likely that it’s with them that Salmond will deal if as is equally likely he wins the next Scottish election. In the meantime the Stormont executive might start getting their heads around what to do when the ticking time bomb of the rates freeze goes off.

  • It was Sammy Mc Nally what done it

    Dont understand why they dont scrap local charges and have legally binding subvention from Central Govt.

  • Ann

    Luckly we don’t have council tax, but I was watching newsnight last night and listened to both sides of the debate surrounding the wind fall tax. One side of the debate insists it will be bad for scotland with its oil reserves, and that it will discourage investment there, but also UK wide. The UK could see energy investment of millions go if they impose this tax on business to help people pay their fuel bills.

    I’m wondering how it will affect NI. Theres a meeting in the Stormont hotel next week I think for small business, called something like the ‘credit crunch – fight back.’..it should be interesting to see how that goes.

    The reason I bring that up is, I heard a comment on the radio this morning saying our politicians are fiddling while ulster burns, and if you want to see politics done in NI go to the stormont hotel, an apt description.

    What are they doing about bread and butter issues or are they only interested in the IRA army council? Will the solving of that problem help us pay our mortgages??

    Lets face it that bunch on the hill with control of our taxes scares the hell out of me, and the only crisis of confidence I face is if they do bid for tax powers they’ll blow the lot in squabbling. At least Salmond is showing the SnP are up to the job, no party here is…

  • Dewi

    Salmond must be praying that the Treasury stick to their guns. It’s a scandalous abuse of power and plays straight into the SNPs hands. Slightly tangential but the way the zeitgeist is going it might make sense for Salmond to hold the referendum before the next General Election. I’m not sure that a Tory victory but would that upsetting even in Scotland….and could change the political dynamic in an unpredictable way.

  • Prionsa Eoghan

    The only flaw that I can see with the SNP proposals are that rich pensioners pay nothing as it is purely income based. However a deal with the Lib-dem’s might thrash out this point. The Libs have a new leader, wonder if he will save them from the brink of self-imposed irrelevance.

    Seems the Nat-bashers cannot come up with any new tricks. The rubbish about how Scotland will suffer, lose jobs, fall of the edge of the world has been seen through by even the biggest feartie. Let’s hope they never learn.

    >>After all, it was New Labour which legislated to allow the Scottish government to do precisely what the SNP are proposing when they set up Home Rule in the first place.<

  • barnshee

    “In the meantime the Stormont executive might start getting their heads around what to do when the ticking time bomb of the rates freeze goes off.”

    Just the job– a local income tax of 3? 4? 5? percent to add to the exploding energy and food costs and collapsing house prices. Can`t wait to see what the inmates at the big house try to do when the chickens come home to roost.

  • Suilven

    Sorry, PE, but I think there’s a huge hole in the SNP’s plans – namely the Scottish Parliament can only alter the BASIC rate of income by +/- 3%; and that only on earned income (ie savings interest and dividends are exempt). Higher rate of 40% would be unchanged. Therefore a individual’s liability is a maximum of £1080 per year (the basic rate band of 36k @ 3%), regardless of how high their income is. That’s the equivalent of the council tax on merely a band C property in Glasgow or Edinburgh.

    But let’s assume we have a rich couple, both earning shedloads, living in a Band H mansion. Each paying £1080 is less than half their current council tax, so that nice Alex Salmond’s just given them a tax cut. Swell. Meanwhile a working couple, neither paying higher rate tax, but close to the boundary, living modestly in a band C house, find that their property taxes have just doubled. Oops!

    Still, never mind, I’m sure the oil will pay for it 😉

  • Salmond wants-indeed needs-a collison over fiscal control with London.

    It allows him to say:

    “Look,if we had more power we could do more-it is London’s fault.”

    This puts Labour and the other unionist parties into a difficult position.

    Clever man Salmond

  • Suilven

    Not sure if the way to do it, Phil, is by proposing a tax that would punish lower-middle class families disproportionately – would have thought they’re the main group he needs to woo?

    Plus, the tax burden changes would fall disproportionately on low council tax regions, which include such SNP fastnesses as Angus and Moray. Nice reward for party loyalty.

  • [aside]Will Salmond be encouraging Calmac, CMAL and relevant Scottish government officials to co-operate with the Rathlin ferry contract investigations?

    And then there’s the NIAO investigation facilitated by Jim Allister MEP:

    And he [Minister Conor Murphy] rejected criticism of the contract commencing while it is under investigation.

    “Jim Allister and John Dallat are the only people to have raised this with me and they make very strange bedfellows,” he said.

    “The necessary standards and technical issues have to be met and if they are not, the contract is breached. That is the standard contractual process.”

    But were the usual features of such a process included in the Rathlin tenders and were any features in the first tender dropped from the second?

    Will most of the mainstream media continue its apparent ‘boycott’ of this story?

  • Suilven – Salmond will simply say:

    Council tax: unfair
    Basic rate increase: sort of fair but best we can do
    Independence: huge surtax on “the rich” and a deep fried mars bar in every pot.

  • Prionsa Eoghan

    >>Therefore a individual’s liability is a maximum of £1080 per year< >a tax that would punish lower-middle class families disproportionately< >Still, never mind, I’m sure the oil will pay for it ;-)<

  • It comes down to a simple question: how long can the unctuous, self-basting Salmond blame others (mainly, of course. the English) for serial failure?

    Didn’t Abe Lincoln have an aphorism about fooling people?

    The essential problem about local income tax is that it simply won’t work. If it is forced to work, it risks all kinds of societal inequity. The LibDems found this out, when they discovered how big an impost it would inflict on none-too-high-earning professionals. At least even they had the sense to pull back. Why? Well, two newly-qualified teachers, at the bottom of the scale, living in a tatty rented flat; council tax = several hundred guid Scots poonds: 3 per cent local income tax = £1500 or so. That’s a weekly Indian meal or night in the pub in anyone’s budget.

    Sticking 3 per cent onto everybody is a disincentive and works against the middle-earners. It does not improve matters, indeed makes them worse, if the top limit is fixed at the higher-tax rate trigger.

    Here’s the logic:

    Local authorities no longer set rates of council tax. Great? Well: it makes every local authority totally dependent on the central exchequer. There are no incentives for efficiency saving; there is no reason for local authorities to improve productivity: were they to do so, there is no mechanism to return those savings to their communities, either by reduced charges, or by improved services. In effect, local government has been nationalised. Perhaps that is what the ScotNats want: a corporate Scotland.

    With Council tax, there is a small, but significant incentive to occupy property efficiently. If I move to a higher-band property, I pay for it. Not so with local income tax. I can occupy as ginormous an estate as I wish, and leave my accountant to prove how little I earn in the Scottish jurisdiction. The al-Fayeds and grouse-moor oligarchs are salivating already.

    Then, what about real workers, those higher earners close to any tax threshold? There is an instant incentive for them to emigrate out of the local income tax area. Local income tax, with or without the £400m subsidy to Council tax payers, imposes a disproportionate cost on middle-high earners See example above, and magnify). Expect a flight of bankers, executives, senior teachers, administrators, out of Scotland. Cue Dr Johnson:

    “There are many fine prospects in Scotland … but the finest sight a Scotsman ever sees is the high road to England.”

    Who pays the cost of collection? Whatever the disadvantages of Council tax/rates. it is a cheap and easy tax to collect. Essentially it is a tax on property, where people live. On the whole, real estate does not move, even if the occupants do. The cost of pursuing income tax payers, with a border a few miles to the south, could be significant. Do we tax people on where they live, or where they work? Who pays for all of this bureaucracy? Do we add a further impost on employers to collect the tax? Result: flight of marginal firms to the south. If I work in Scotland, live in England, and am paid by an English company, do I pay the local tax, and who pays for the collection (presumably not the rest of the UK)? Solve that one; and then consider the consultant or migrant worker who works in Scotland only some of the time.

    Heaven help me: I’m thinking and writing like a Tory! That said, I find the logic of the CBI and the Scottish Conservatives far more convincing than the gossamer-thin arguments of the ScotNats. And that admission cost me real socialist blood.

  • Suilven

    Stick your insults up your arse, PE. I’ve explained it more than adequately above. But here goes, for the hard of thinking. Basic rate income tax is only charged on the first £36k of taxable income. The Scottish Parliament can only vary basic rate tax by +/-3%, and do nowt to higher rate tax. Ergo, as things stand, an individual’s liability is limited to £1080. To do anything else, Salmond’ll need an act of the UK parliament, which he ain’t going to get.

    “All the studies have shown that just over 4 out of 5 families will be better or no worse off.”

    According to the SNP – others have less flattering figures. All based on a tax it’s not with Salmond’s powers to charge. And assuming of course that any flat rate tax is proven competent in the courts:

    ‘articles 7 and 9 enshrined the right of councils to vary their own levies, and that this would be removed in the Scottish Government’s proposal for a fixed income tax charge.’

    ‘It seems to me that a proposal to remove from Scottish local authorities any power at all to determine the level of their own financial resources through local taxation is almost certainly in breach of Article 9’

    http://news.scotsman.com/scotland/Local-income-tax-39would-be.4121129.jp

  • Prionsa Eoghan

    Malcolm

    And you are normally such a sensible fellow too;

    >>living in a tatty rented flat; council tax = several hundred guid Scots poonds: 3 per cent local income tax = £1500 or so.< >3 per cent local income tax = £1500 or so< >If I work in Scotland, live in England, and am paid by an English company, do I pay the local tax, and who pays for the collection< >Stick your insults up your arse, PE.< >“All the studies have shown that just over 4 out of 5 families will be better or no worse off.”

    According to the SNP – others have less flattering figures. All based on a tax it’s not with Salmond’s powers to charge.<

  • Prionsa Eoghan @ 09:54 PM:

    I hope the rest of your research is better than your knowledge of Scottish teachers’ pay scales:

    Scale point/April ’08/April ’09/April’10
    0 £20,427 £20,937 £21,438
    1 £24,501 £25,113 £25,716

    Source: http://www.teachinginscotland.com/tis/119.29.32.html

    Meanwhile:

    Council tax, Glasgow, Band A: £808.67

    Just the facts, Ma’am, just the facts.

  • Dewi

    “unctuous, self-basting Salmond ”

    That’s a bit mean Malcolm – he’s a nice bloke actually. Save your hyperbole 4 the labour leaders.

  • Prionsa Eoghan @ 09:54 PM:

    The more I try to comptrehend your argument — and I am, I assure you — the more bizarre it gets.

    Prime example (omitting the “cunning plan reference):

    you only pay council tax for where you live. The replacement income based tax will follow this, … The English company will tax anyone who lives within the realms of Scotland unless England adopts this policy also.

    So: My family home is and remains in England, where I pay council tax. My firm is commissioned to undertake a Scottish contract for x months. I stay four nights a week in a hotel for that time. How is the local income tax [LIT] collected? Does my firm, based in England, bear the cost of somehow calculating and remitting a proportion of my earnings? Is that “fair competition” (an additional impost on non-Scottish companies) going to stand up in the EU?

    Again: I live in Berwick, where I pay my Council tax. I run an operation in, say, Eyemouth. Am I then liable for both taxes? Should I move? Should I move my plant to a nice industrial estate the other side of the border? Might my employees be only too happy to live in Scotland, with no council tax, and be paid in England, with no LIT? Either way, as Mrs Waldo put it, “What will the neighbours say?”

    These are hypotheticals, but they are not Baldrick nonsenses. The industrial and commercial base of Scotland is not a million miles across from England. Firms are already baling out of the UK because of the differential Corporation Tax. Here is the Scottish executive proposing a further imposition on middle-earners (they are not presently able to impose on higher income tax earners, as Suilven explained.

    To conclude (and save time and key-strokes):
    I see that the Law Society of Scotland sums up their concerns with five essential considerations:

    whether the proposals outlined in the consultation paper constitute a local tax and therefore whether the Scottish Government has the constitutional authority to implement such a system;
    whether HM Revenue and Customs (HMRC) are willing or able to collect the tax (if they are, changes to UK legislation would be required);
    the effect of such a tax on those with low incomes;
    the effect on families receiving tax credits;
    the difficulty of introducing discounts and exemptions into the scheme;
    the effect on disabled taxpayers in employment.

    Do you accept that such are valid considerations?
    And that, so far, the Scottish Executive has not answered them?

  • Suilven

    PE,

    ‘It is completely seperate to “income tax”’

    Hmmm, let’s see now. Let’s compare Mr Salmond’s “Local Income Tax” with the income tax-varying powers granted to the Scottish Parliament under the Scotland Bill 1997/98:

    Does it provide that income from savings and distributions is to be exempted? Check.

    Is liability determined by residence in Scotland? Check.

    Will the Inland Revenue (now HMRC) administer any tax variation? Well, that’s the current SNP plan.

    Now, the tax rate. Interesting that the rate selected by the SNP should be 3%, albeit at the cost of a huge subvention to the councils to make up the shortfall. Again, just satisfying the Scotland Bill provisions…

    Yep, I’m afraid what you’ve got here is ye olde Tartan Tax, tarted up a bit to confuse the simple. And when the higher rate increase gets struck out, either in the parliament or the courts, take your pick, what you’re left with is the king of regressive taxes.

    Of course, it’ll never come to that – due to your next canard:

    ‘Do you suppose that those trifling pieces of legislation may be altered if that is what the Scottish Parliament votes for?’

    What you call ‘insignificances’ and ‘trifling pieces of legislation’ is actually a European Treaty, matey. Even an independent Scotland would be screwed as every country in Europe is a member of the Council of Europe (with the exception of Belarus, and even it’s applied), and new member states are expected to ratify the Charter at the earliest opportunity.

    PS It may surprise you to learn that newly qualified teachers in Scotland (ie after their probationary year) earn the princely sum of £24,501, rising in the absence of promotion approximately £1500 annually thereafter.

  • Suilven

    Apologies to Malcolm, who beat me to on Scottish teaching pay scales, as well as much else.

  • Dewi @ 11:10 PM:

    1. Salmond

    I had a cousin who used the line: “He sprang from the working class? Well, he certainly made damned sure he sprang a long way.”

    I am assured that Salmond had a lefty past, grew up on a Linlithgow housing estate, was even a “socialist republican”. So far, so good. He then became a Savile-Row-suited, smooth-talking Tartan Tory and oil analyst for the Royal Bank of Scotland. That’s one heck of a spring.

    As far as “a nice bloke actually”, that’s not the view I hear, even from other ScotNats. The general view is that, like Mandelson, taking an instant dislike saves one a lot of time.

    2. Save your hyperbole 4 the labour leaders

    You’ve never heard me, much, on Labour leadership, past, present and future.

    Suffice it to say, the nicest description I had was a fellow Councillor referred to me as the “Norman Hunter of Labour politics”. The reference was to “Bite Yer Legs” Hunter of the 1960s/1970s Leeds United team: the other half of the Jackie Charlton defence.

    Enough modesty.

    And it’s good-night from him.

  • Prionsa Eoghan

    Malky

    >>The more I try to comptrehend your argument—and I am, I assure you—the more bizarre it gets.< >at the cost of a huge subvention to the councils to make up the shortfall.<