Colin Fox on abolishing the council tax.

Time To Abolish The Council Tax - Not Freeze It

The opinion polls suggest Labour and the SNP are neck and neck in the race for Holyrood 2011. Interestingly both parties now support a freeze in Council Tax bills for the next year. They arrived at this 'freeze' via different routes however.

Like the Scottish Socialist Party the SNP are opposed to the Council Tax in principle, believing, as the majority of Scots do, that it is unfair and hits the less well off disproportionately hard. The Council Tax is indeed a regressive tax that bears no relation to a person's income. Consequently the least well off are hit hardest as the wealthy pay coppers. Since they have not been able to replace it with an income based alternative, the SNP have settled for second be stand 'freezing' the current charges.

Labour on the other hand has no principled objection to the Council Tax. They argue for a freeze on the grounds that they purportedly want to 'help hard working families in this time of austerity'. Most people believe that it has more to do with avoiding being politically outmanoeuvred by the SNP. Either way freezing the Council Tax does nothing to address it's fundamental unfairness. Indeed it may be argued a freeze helps the rich most of all.

As things stand the wealthy in Scotland pay a tiny tiny percentage of their income on this bill. For example,Stephen Hestor (the CEO of RBS) was just awarded a £7.7 million pay package for the coming year. Living in Edinburgh his Council Tax bill will again be frozen at £2,338 or 0.03% of his salary whilst some pensioners are paying 25% of their income on theirs.

The Scottish Socialist Part believes this is utterly unacceptable and this week we will highlight our fully costed proposals for a local income tax to replace the Council Tax. Our plans would mean the burden would be lifted from the shoulders of of pensioners, low paid workers and the poor and at the same time force the wealthy to pay their fair share for a change.

Here's how it works. Each individual in Scotland will pay towards the funding of local services but the more you earn the more you pay. So, for example, if your income is less than £10,000 you are exempt. That's too low to force people to contribute. Thereafter, on incomes over £10,000 and up to £30,000 you pay 4.5%. So if you are on £200,000 your bill is £450 [4.5% of the earnings over £10,000] If you earn more than £30,000 you pay nothing on the first £10,000, 4.5% on the next £20,000 and 10% on the earnings over £30,000. The next incremental step is to 15% on earnings over £50,000 and 20% on earnings over £100,000. This graduated rate (which the SNP opposes) is fairer and ensures that as your income goes up so does your tax obligation.

Economists at Paisley University who scrutinised these figures found that 77% of Scots will be better off compared to now. Furthermore, using the latest Her Majesty's Revenue and Customs figures, they are able to demonstrate that these proposals would bring another £1.5 billion into Holyrood's Treasury.

So, not only would this tax be fairer and redistributive, it would also halt the need for any cuts to public services in Scotland. And that's a freeze we DO need.

Taken from Colin Fox's blog @ http://sspcolinfox.blogspot.com