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'Rip it up and start again'

Brian Taylor | 14:48 UK time, Thursday, 12 February 2009

Entertaining stuff at first minister's questions.

Iain Gray tore up a copy of the SNP manifesto, presumably having removed a few pages first in order to ease the task.

Tavish Scott followed Mr Gray in suggesting that the next casualty from the said manifesto should be the promise to hold a referendum on independence.

But, amid all the sound and fury, perhaps the most intriguing question, long term, came from Annabel Goldie of the Tories.

What, she asked, happens to council tax now?

Good question. What indeed? With local income tax now abandoned for this parliament, will there be efforts to reform the council tax?

The Tories say they'd cut the rate for all - and add an extra cut for pensioners. Labour? They'll get back to us once they've decided precisely what to do, painfully aware that their plans at the last election didn't stack up.

Political pain

It's likely, however, that any reform they suggest will involve rebanding in order to make those in bigger houses pay a higher proportion of the charge.

Will the Scottish Government itself sanction reform of the council tax, now that it has dropped its own proposals? Perhaps on an interim basis pending efforts to return to LIT post-election?

Seems unlikely. Seems much more probable that they'll concentrate on their project to freeze council tax charges in order to lessen the pain for those obliged to pay.

Here's another question. Why didn't ministers lessen the political pain for themselves by advancing a Bill to introduce LIT, watch it fail - and then blame their Labour and Tory rivals?

Because they had come to the conclusion, for a range of reasons, that LIT wasn't going to run in current circumstances.

It is, arguably, to their credit that they didn't pursue the Machiavellian option outlined above, that they confronted the question and took the hit.

Remember that the problems afflicting LIT were cumulative. Firstly, ministers were already committed to spending millions in order to peg LIT at 3p in the pound.

Anti-recession agenda

Which, in itself, tells you that they acknowledged potential problems if LIT was allowed to float freely.

Secondly, those millions become less readily available when set against a relatively tight financial settlement - and one that is set to become tighter once Scotland suffers the Barnett consequential of efficiency savings being imposed upon Whitehall.

Thirdly, the issue of council tax benefit. If withheld under LIT, as UK ministers have insisted would happen, that would add hugely to the cost of the new tax.

Scottish Ministers could not guarantee that the benefit would continue.

Fourthly, the question of collection. Would the Scottish Government be legally entitled to order HMRC to collect and distribute the new revenue?

Fifthly, business opposition. Ministers insist they were ready to face down that opposition, if necessary.

But how much easier to pursue an anti-recession agenda if you withdraw a tax plan loathed by business.

Politically, Labour will now pursue the claim that the SNP cannot be trusted in office. In return, the SNP will pursue the argument that they have been thwarted by London misrule.

In outline, there, the next election.


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