Replacing council tax with a local income tax was one of the major pre-election policies of the Scottish National Party before it became the minority government. As the SNP failed to win an overall majority, and has only 47 of the 129 MSPs, first minister, Alex Salmond, must reply on the support of other parties if he is to have any of his key policies implemented. So, what are the prospects of a local income tax (LIT) being introduced in Scotland, resulting in different local taxation systems north and south of the border? Critics suggested LIT and other SNP commitments would stand no chance of making progress. However, Mr Salmond has proved the sceptics wrong. He has been remarkably successful, so far, in fulfilling some of his flagship commitments. These include abolishing the graduate endowment – the fee paid by students after they graduate – axing bridge tolls, extending free personal care for the elderly, saving local hospital accident and emergency departments, announcing plans to cut primary school class sizes and introducing major reforms to speed up house building. Significantly, he has also made progress over LIT. Last month, the parliament approved – by a majority of two votes – a motion saying that LIT based on ability to pay is a fairer system of local taxation than the ‘discredited and unfair council tax'. But the SNP still has a great deal of work to do, if it is to convince critics that its scheme would work. The proposal is unlikely to find favour among councils as the rate of LIT – 3p in the pound – would be set nationally and not locally. And there is a potential ‘black hole' in the SNP's financial calculations. Not surprisingly, ministers at Westminster have warned – ‘No council tax, no benefit'. The LIT scheme is by no means ruled out, but it still has a long way to go before it has any chance of being implemented.
