Could we possibly have a situation in which different local taxation systems operate north and south of the border? The answer is, Yes. The devolution settlement gave the Scottish Parliament the power to decide its own system of local government finance. Is it likely to happen? Well... it's looking more possible than ever before. The prospect of Scotland scrapping the council tax and introducing a local income tax (LIT) has become more credible because of the standing of the Scottish National Party in opinion polls. It has been consistently ahead of Labour, and the SNP could become the largest party in the Holyrood Parliament. The Nationalists recently published proposals of their LIT plans. The tax would be charged at a rate of 3p in the pound, and the party claimed that nine out of 10 Scots would be better off under the new local finance system. Council tax would be frozen at 2007-08 levels for two years until LIT was introduced. If the SNP does become the largest party after the 3 May elections, it does not follow that it would then be in a position to implement its tax plan. To govern, it would need to forge a partnership with another party, such as the Liberal Democrats. If it did, then LIT could still be on the agenda, as the Lib Dems' own local government finance policy favours a local income tax. The big stumbling block to such a coalition is the SNP's insistence on holding a referendum on independence, which the Lib Dems oppose. LIT has, nevertheless, become an intriguing issue. The SNP tax plan, however, goes against all the principles of local accountability upheld by councils, since the maximum 2p rate would apply to every authority. This feature is its main weakness. On that count alone, it will be strongly resisted – unless, of course, the SNP successes nationally are repeated in local government.
