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Entertaining tax changes

Brian Taylor | 12:19 UK time, Monday, 27 October 2008

Entertaining stuff, eh?

I refer to the sundry shifts in the Scottish Government's position with regard to Local Income Tax. Said shifts follow fairly blunt animadversions against the plan from rival parties.

In itself, there is nothing wrong with amending proposals. Indeed, it is the very purpose of consultation. If governments got everything right on every occasion, there would be no need for consultation. And, further, no need for law-making Parliaments.

However, the scope of the potential changes merits further examination.

What would remain of the original SNP proposals?

More, would the changes enhance the propspect of this Bill passing Parliament when put to the vote?

On the first point, rather a lot - indeed, the core. Scotland would shift from a system of local taxation predicated upon property to one predicated upon income. You earn, you pay. The changes are substantive but not utterly transformational.

Change one, students might be exempted.

Change two, there would be an attempt to extend LIT to cover "unearned" income, such as money derived from shares (if such might be envisaged in the current turmoil.)

Change three, councils might be able to vary the rate at which they set LIT.

SNP Ministers had previously insisted that the rate be fixed at 3p in the pound. Now, they hint that might be the cap. Councils could set LIT below that - but not above. That would still involve a substantial transfer of funds from central government to hold the rate to a maximum of 3p.

Re. unearned income, Ministers originally thought, as did others, it would not be possible to include such dosh.

Now it's thought by some, including Jeremy Purvis of the LibDems, that it could be possible to feature this loot by adding new elements to the system of tax self-assessment.

Others, it should be said, dispute this, saying it remains impractical.

Basically, Ministers are giving ground to those animadversions. Why should students pay? Why should those whose income isn't derived from salary escape? Wouldn't it end all local authority liberty and responsibility if they don't set taxation?

Opponents, including Labour and the Tories, say the changes don't add up to a hill of beans by comparison with the downside of loading too much weight onto salaried income. They warn of the impact on business, particularly at a time of economic downturn. They're looking to reform the council tax instead.

Then there's question two. The SNP doesn't have a majority at Holyrood. Do these potential shifts - tracked by the BBC's Politics Show at the weekend - do enough to win over the LibDems and the Greens whose votes would be needed?

Right now, no.

I stress: right now. The LibDems are, formally, in favour of LIT - but like that first word, "local". They say that variation up to 3p isn't local discretion. Their MSPs, even more so their councillors, will need more.

Further, there are more than a few in the upper reaches of the party who wonder whether LIT is really so wonderful at all.

The Greens also remain to be convinved. They dislike LIT, preferring land value taxation whereby there would be incentives to derive the maximum sustainable use from a property. They do not accept that LIT is, de facto, "fairer" than other systems, arguing that, even with the proposed reforms, it may neglect other sources of wealth in favour of predominantly taxing income.

Intriguingly, the Greens are also prepared to contemplate options which might emerge from Iain Gray's promised review of such matters. Mr Gray has openly admitted that Labour's policy on this question at the last Holyrood election was an uncertain mess.

Instead of dealing with the government, could the Greens deal with the largest opposition party?

Both the LibDems and the Greens, I suspect, could be swayed. But they are not there yet.

PS: Saw David Tennant in Hamlet at the weekend. I know, I know, theatre reviews now: what next, recipes? Indulge me: theatre is a major passion for me, not far behind the team in tangerine. (To whom, all praise for Saturday's glorious goals in fitting tribute to Eddie Thompson.)

The production was superb, with Tennant exceptional. He coped brilliantly with the classic dilemma involved in playing the troubled Dane: do you portray him as temporarily insane or as dissembling, merely "mad north-north-west".

Tennant depicted him as emotionally disturbed and unsure, brilliantly exploiting his uncertain relations with his mother as well as the perturbation caused by his father's death.

In addition, there was whimsy, irony - and a return to the humour which is or ought to be present in the text (Polonius, the grave-digger, Osric, Hamlet himself.) Magnificent.


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