Chamber
Plenary, 01 Feb 2006
01 Feb 2006 · S2 · Plenary
Item of business
Council Tax Abolition and Service Tax Introduction (Scotland) Bill: Stage 1
I will make some progress, if the member does not mind.
The committee's findings have exposed the fact that the bill represents the greatest gamble since Charles Wells broke the bank at Monte Carlo. The big difference this time is that Mr Sheridan has put on the table—and at risk—every school, care home, leisure centre and highway in Scotland. Yet, with the stakes so high, he has chosen to go forth with the least popular tax ever to have been proposed in Parliament. Five political parties oppose it. Parliament has rejected the proposal five times, and the Local Government and Transport Committee rejected it for the second time last week.
Last week's Local Government and Transport Committee stage 1 report states that the bill
"is a flawed proposal, which would not have the impact on poverty that is claimed, would damage the Scottish economy and undermine local democracy".
As a result, the committee
"recommends that the Bill should be rejected by Parliament at Stage 1."
That crushing indictment can be further unpicked to highlight some of the bill's problems.
First, the report says that the bill would not have the impact on poverty that is claimed. Mr Sheridan's calculations on the beneficiaries took insufficient account of individuals who receive council tax benefit. Council tax benefit of up to 100 per cent is available to those who are on lower incomes. Those people would be no better off under the service tax proposals, as they already have no council tax liability.
Secondly, the report states that the bill would damage the Scottish economy. There has been no substantive consideration of the bill's wider economic impact, most notably with a view to fiscal flight. We just heard Tommy Sheridan say that he does not give a damn who leaves the country. Every entrepreneur can be hounded out of Scotland and he does not care. Given the proximity of England and our common language, it seems plausible that there would be a risk of fiscal flight if we had significantly higher tax rates here in Scotland. Even a small amount of fiscal flight among higher-income earners would significantly affect the revenue forecasts for the service tax and shift the burden to the rest. The research paper on which the proposals are based estimates that more than half of the revenue from the service tax proposals would come from the top 5 per cent of income tax payers—those with the greatest opportunities to relocate if they want to.
The committee concludes that the bill would undermine local democracy. By abolishing the council tax and introducing a nationally set income tax, the bill would strip our local authorities of the important power to set their own council tax levels.
The committee's findings have exposed the fact that the bill represents the greatest gamble since Charles Wells broke the bank at Monte Carlo. The big difference this time is that Mr Sheridan has put on the table—and at risk—every school, care home, leisure centre and highway in Scotland. Yet, with the stakes so high, he has chosen to go forth with the least popular tax ever to have been proposed in Parliament. Five political parties oppose it. Parliament has rejected the proposal five times, and the Local Government and Transport Committee rejected it for the second time last week.
Last week's Local Government and Transport Committee stage 1 report states that the bill
"is a flawed proposal, which would not have the impact on poverty that is claimed, would damage the Scottish economy and undermine local democracy".
As a result, the committee
"recommends that the Bill should be rejected by Parliament at Stage 1."
That crushing indictment can be further unpicked to highlight some of the bill's problems.
First, the report says that the bill would not have the impact on poverty that is claimed. Mr Sheridan's calculations on the beneficiaries took insufficient account of individuals who receive council tax benefit. Council tax benefit of up to 100 per cent is available to those who are on lower incomes. Those people would be no better off under the service tax proposals, as they already have no council tax liability.
Secondly, the report states that the bill would damage the Scottish economy. There has been no substantive consideration of the bill's wider economic impact, most notably with a view to fiscal flight. We just heard Tommy Sheridan say that he does not give a damn who leaves the country. Every entrepreneur can be hounded out of Scotland and he does not care. Given the proximity of England and our common language, it seems plausible that there would be a risk of fiscal flight if we had significantly higher tax rates here in Scotland. Even a small amount of fiscal flight among higher-income earners would significantly affect the revenue forecasts for the service tax and shift the burden to the rest. The research paper on which the proposals are based estimates that more than half of the revenue from the service tax proposals would come from the top 5 per cent of income tax payers—those with the greatest opportunities to relocate if they want to.
The committee concludes that the bill would undermine local democracy. By abolishing the council tax and introducing a nationally set income tax, the bill would strip our local authorities of the important power to set their own council tax levels.
In the same item of business
The Deputy Presiding Officer:
Con
The next item of business is a debate on motion S2M-3893, in the name of Tommy Sheridan, on the general principles of the Council Tax Abolition and Service T...
Tommy Sheridan (Glasgow) (SSP):
SSP
Today's debate is about right and wrong, justice and injustice and the unacceptable twin scars of poverty and inequality, which continue to shame our country...
The Deputy Minister for Finance, Public Service Reform and Parliamentary Business (George Lyon):
LD
I thank the Local Government and Transport Committee for all its hard work in examining Tommy Sheridan's proposal to abolish the council tax and replace it w...
Frances Curran (West of Scotland) (SSP):
SSP
Will the member take an intervention?
George Lyon:
LD
I will make some progress, if the member does not mind.The committee's findings have exposed the fact that the bill represents the greatest gamble since Char...
Mr John Swinney (North Tayside) (SNP):
SNP
Does Mr Lyon accept that, if the service tax was introduced and a national rate of taxation for local authorities was to be set, that would give ministers su...
George Lyon:
LD
I thank Mr Swinney for that intervention, which highlights why we oppose the bill. The taxation level would be decided in the Parliament instead of at the lo...
Mr John Swinney (North Tayside) (SNP):
SNP
The debate is about a two-part proposal. The first is the abolition of the council tax and the second is its replacement with a Scottish service tax. I will ...
Mike Rumbles (West Aberdeenshire and Kincardine) (LD):
LD
For the sake of the debate, will the member tell us how much additional money the SNP believes the Scottish Executive should give to the local authorities?
Mr Swinney:
SNP
It is obvious that Mr Rumbles was not present on 12 January when, to many complaints from Labour members, I spoke for 18 minutes and gave an extensive explan...
Mike Rumbles:
LD
Will the member just tell us?
Mr Swinney:
SNP
I am just getting to it. I was going to give a long explanation so that Mr Rumbles would get a flavour of the excellence of that speech, in which I said that...
Mike Rumbles:
LD
Where would the money come from?
Mr Swinney:
SNP
The member should know that it is more courteous to get up to intervene than it is to shout from the back benches. Of course, his Liberal colleagues on the f...
Mike Rumbles:
LD
Ah. It is coming from nowhere.
Mr Swinney:
SNP
If Mr Rumbles is sceptical about that point, I suggest that he speak to the Liberal Democrat administration in Aberdeenshire, which has made relatively simil...
Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD):
LD
Will the member take an intervention?
Mr Swinney:
SNP
We have heard enough from the Liberals today. We finished off Mr Purvis the last time and we would do it again in a moment.We believe that the council tax is...
Carolyn Leckie (Central Scotland) (SSP):
SSP
For how long has it been Scottish National Party policy to support the abolition of the council tax? Where is the SNP's bill to abolish it?
Mr Swinney:
SNP
The SNP has supported the abolition of the council tax for a considerable time, and we produced a paper on the introduction of a local income tax. The SNP wa...
Iain Smith (North East Fife) (LD) rose—
LD
The Deputy Presiding Officer:
Con
Mr Swinney is in his last minute.
Mr Swinney:
SNP
Who would suffer if this Administration was able to exert even more control over local authority finance? The usual people would suffer: children with specia...
Mr David Davidson (North East Scotland) (Con):
Con
I congratulate the Local Government and Transport Committee on its conclusion, which it reached as a result of some excellent evidence sessions, and I thank ...
Bristow Muldoon (Livingston) (Lab):
Lab
I want to make one point in response to Tommy Sheridan's speech. I asked before how much people on £25,000 would pay in Scottish service tax. Tommy Sheridan ...
Frances Curran:
SSP
How much does the member get?
Bristow Muldoon:
Lab
Exactly the same as other members do. The Council Tax Abolition and Service Tax Introduction (Scotland) Bill is the most ill-considered and poorly researched...
Frances Curran:
SSP
Will Bristow Muldoon give way?
Bristow Muldoon:
Lab
Not just now. I want to make some progress.
Frances Curran:
SSP
Come on. He should give way.