Getting the benefit
Herewith a wee thought anent the stushie about Local Income Tax or, more precisely, the future of benefits should Scotland opt for LIT.
UK ministers say there could be no question of continuing to pay 拢400m worth of council tax benefit from the Treasury to recipients in Scotland 鈥 if council tax has been scrapped.
Is there a way round that?
Logically, I can see the force of the UK Government鈥檚 argument. Council tax benefit compensates for those who are unable to pay the levy because they are on low income.
The benefit is paid en bloc to local authorities 鈥 but it is based upon the number of low income households.
The very purpose of local income tax is to transform that situation, to levy council taxation upon ability to pay. Low income households would pay less, by definition.
Why, then, should benefit continue to be paid 鈥 when the problem it addresses no longer exists? Because, say Scottish Ministers, it is 鈥淪cotland鈥檚 money鈥.
Scottish local authority finance survives on a combination of council tax, business rates, Scottish Government grant and UK Government benefits.
Why should one prop be removed entirely because the nature of another element, individual local taxation, has been reformed? Because, says logic, you have to have a firm basis for finance.
Even if some form of benefit or benefit equivalent is to be maintained, you have to have a firm basis for calculating it. Not just this year 鈥 but 10 years hence when council tax in Scotland would be a distant memory.
For all the rhetoric, I believe that Scottish Ministers understand that only too well.
Hence, I would not be surprised to see them suggesting that the annual subvention to Scotland to compensate for low income households in local finance should be calculated via the Barnett Formula.
It would work like this. Scotland would get the Barnett consequential of council tax benefit handed out in England. As in the past, that would be used to mitigate the cost of local services.
Not sure that would be looked on with any more favour by the Treasury. But it would at least have fewer logical inconsistencies.
I'm 
Comments
Brian makes good point about logic in the two government's positions. However, what right does the UK Govt have to deny Scottish taxpayers 400 million of their contributions just because of a poorly conceived devolution settlement.
Please, please don't let the muppets and numpties at Holyrood tamper with any more of our money, laws and services. They are mainly second-rate people, with many in the third and fourth political divisions. I live in fear of the next populist cock-up. We are sleepwalking into the Third World and will eventually find ourselves debt-ridden and without resources.
Sounds logical to me Brian (I think!). Presumably if Westminster don't agree, then the 大象传媒 will headline this as "Brown picks another fight with Salmond"???
UK ministers have more important things to do with Scottish tax payers money, e.g. war in Iraq, war in Afganistan, nuclear weapons on the Clyde, prop up a failed bank and last but not least keep speaker Martin in the luxury he has become acustomed to!
I write this as neither a native-born Scot (I've lived most of my life 15 miles south of here) nor an SNP supporter.
It appears to me that when the Westminster government in the shape of the Exchequer starts to fiscally disadvantaging the Scottish Government further, and by natural extension punishing the Scottish people via their pockets, because the Scottish Government is planning to do something that Westminster doesn't like, then surely as night follows day, public opinion in Scotland is going to shift towards demanding a more radical outcome - full devolution/full independence, exactly the outcome Westminster is hoping (in a clumsily-executed badly-thought through neo-colonial fashion) to avoid.
Uncharitably one might suggest that if the Westminster government has implicitly acknowledged that Council Tax is unfair (if it's unfair in Scotland, surely it's unfair in England too) that they will strive to make it more fair south of the border - but I think we all know how likely that is. After all, when northeast England voted against having a regional assembly in 2004, it also voted overwhelmingly against transforming Northumberland and County Durham into unitary authorities - 2 new unitary councils covering County Durham and Northumberland were announced this week.
I wonder when (if) the powers-that-be in London will realise that their efforts at forcing policy on the Scottish Government (Welsh Assembly and NI Assembly pay attention) by tightening the purse strings are far more likely to drive the wedges further into the United Kingdom than heal the divide.
The answer is financial independence,in Australia ,Canada etc each state or provence raises its own cash and pays a certain amount to central government and dont give me the argument that Scotland cant afford it. New Zealand a country of 5 million manages quite nicely I dont hear folk saying that New Zealand should stop being independent and become part of Australia .
Brian at his Unionist best.
Did anybody see tonights Reporting Scotland as usual another ant-SNP story dressed up as report about Aberdeen Cooncil.
Scottish Ministers - like everyone else in Scotland - will wonder why it is necessary to pay the taxes on Scotland's people, Scotland's industries and Scotland's mineral resources into the treasury of a far off country of which we know little (and care less) in order that some tithe of it may be grudgingly returned. Cut out the middle man! Let us all pay our taxes into the Scottish treasury, and all of these problems disappear in a flash.
It really matters not a jot that both the prime minister and the chancellor of England are now Scots by birth. They have, in effect, emigrated. Even should they choose to return post independence, they will find that the political ecology of Scotland has moved on, and there is no longer a niche for their political phenotype.
Brian,over and above the argument about whose money belongs to who,the administrative savings from both the freeze and the move to LIT centrally set(in the first instance)must be mega millions on it's own.Not to mention the hassle to the poor citizens who have to run to the council tax benefit office every time there's a change in their circumstances.I'm presuming that these savings will stay with the local councils and not have to be remitted to Edinburgh.I hear what you say about CTB but,like the attendance allowance argument,it was paid to people depending on their circumstances and is still their money.It can be called poverty or relative poverty but it's still a problem which the Scottish Government should be funded to help.
Perhaps posters 2 & 7 could find a wee world of their own to go post insults at each other & keep the real debate for the grownups.
This, to me, strikes me as one of the reasons for each country to generate and collect its own taxes, then spending isn't constrained by bickering such as this. Both viewpoints for this issue seem valid, though probably the Westminster viewpoint is more correct.
The divergence of the countries in the UK seems to be stirring up a lot of resentment, largely because it's extremely unclear where money is coming from sometimes. Today's example was free parking for hospitals in Wales, stirring up lots of resentment from the English quarter.
The issue of council tax reform is a good position to argue for Scotland to collect and spend its own taxes, and pay back into the UK for certain shared pots: military, research funding, etc. That, for one, would help clear up parts of the SNP's argument for independence, and, for two, it might give people confidence in our ability to pay our own way.
Public spending per head is much higher in Scotland than it is in England in any case. So it's a bit rich to talk about "Scotland's money". Roll on Scottish independance, I say (as an Englishman) - then we can stop subsidising Scotland.
To "A Collyer": Public spending per-head is, in Scotland, slightly higher than in England, on average. It's true. We can't deny it.
And it's a shame people bandy this statistic around so much. It's only half the argument: It doesn't take into account the volume of tax generated in Scotland.
In various places (FT, Economist and, to cite an old example, that government report from 1974, to name a few), I've seen the assertion that Scotland also generates more tax per-head than England, on average. And that, on balance, Scotland's incomings are surprisingly close to Scotland's outgoings. I've yet to see anything which disputes this; there's nothing thus far which really asserts that Scotland couldn't make it financially. If you watch really carefully, you'll notice that no serious Unionistically-inclined politician really suggests that Scotland couldn't survive economically on its own, and you'd assume they would use such a strong argument in their favour.
So, yes, you're correct when you say that spending is higher in Scotland. But it doesn't follow from there that Scotland is being "subsidised".
Collyer, last year Scotland sent 拢49million in tax (no oil money or natural gas included in these figures) to Westminster and got 拢30million back. Precisely who is subsidising who here?
It may have escaped some posters attention, but Scots pay taxes to Westminster as well as do the English. If then, as Westminster proposes, the English are to continue to get a local authority funding subsidy from Westminster, and the Scots are to have theirs removed, then it will be the Scottish taxpayer who is subsidising England's council tax payers.
Great idea to thwart the Independence cause Gordon!
#8
There's so much indirect spending on each and every one of you down south which they don't include in the official figures, just to make it look as if Scotland gets a lot more.
Just give us our oil money back for the past 30 years, and we'll see who has been subsidising who!!!
I have to admit I don't think the UK Government's position on this is entirely logical. It seems to me that Council Tax Benefit is simply the mechanism. The idea behind the benefit is to make sure local taxation is not excessive, particularly for people on low incomes. While LIT would be fairer, in relative terms given people's different incomes it doesn't seem fair that the local councils have to raise 拢400M more through local taxation simply because they use a better system for raising it.
At the end of the day, there are two aspects to the "fairness" of the local taxation levels. One is the relative fairness within the local area and in that sense LIT is fairer than council tax. The other is the total tax burden, or the amount the council needs to raise to provide the same level of services and how that compares to other councils --- north and south of the border. While Council Tax Benefit is pitched as aimed at the first kind of fairness, it does also, whether by accident or design, affect the second.
Obviously there is an issue about how to calculate the amount in future if LIT comes in but, as Brian points out, that's a problem that's been met in other areas and the answer is usually the Barnett formula. Whatever, that's a secondary argument to the principle of whether councils (not the Scottish Exec!) should continue to get that money in principle.
very interesting blogg today brian (i promise to behave ) on the 1 hand we have post no8. who is giving us the usual daily mail daily express and dare i say it bbc line england is subsidising us and by implication we are all spongers and on the other hand we have no.5 (jason) who has actually worked it out.westminster is playing a very dangerous game . as someone who thinks we are no where near being ready for independance we may be left with no other option as the status quo is no longer an option and the 3rd option of federalism is being squeezed big time. Brian if you were an MD of a plc and a part of the buisness was underperforming and was being propped up by a bigger part of your buisness would you fight hard to keep it or sell it off ? all the stuff coming out of london and southern england doesn't add up and all they are doing is the nationalists job for them.
Given that the 拢400m subsidy ultimately comes from taxes, if Scotland isn't getting the money, other taxes, such as income tax or VAT, should be lowered in Scotland. If not, Scottish tax payers would be subsidising England.
Brian Taylor:"Why, then, should benefit continue to be paid 鈥 when the problem it addresses no longer exists? Because, say Scottish Ministers, it is 鈥淪cotland鈥檚 money鈥.
It is about all the tax revenues raised in Scotland being used for council services, not with-held by the British Treasury via Westminster politicians who didn't like the way Scotland voted last year.
Also, what happens if your question is applied to Northern Ireland, who do not have a Council Tax system but receive monies that correlate with what occurs in Council tax rebates?
This will bite Labour where it hurts-Purnell has made some rather ludicrous claims and this whole debate will be scrutinised-invariably leading to the inhabitants of Scotland realising still further that a fiscal responsibility for devolved powers would have meant that the British Treasury wouldn't have the power to retain a portion of our tax revenue.
The children of Westminster try all their playground tricks to impede the legally elected Government of Scotland; all such acts are noted by voters, those who have not noted or have forgotten I鈥檓 sure will be appraised of the situation at the time of the next General Election.
Gordon Brown: If you think this is the best way to return a majority of Labour MPs to Westminster, a majority necessary to have a Labour Government in power after the next General Election think again!
You stand to annoy floating and switch voters as well as dyed in the wool Nationalist; remember there are other parties who will gladly accept protest votes and claim it is all down to their policies; you are walking the fine line between Government and opposition!
Lose Scotland; lose Downing Street!
It's interesting that Unionist position on this appears to be that it is perfectably acceptable for Wesminster to snub Scotland and deny it of its own taxes!
What a strange way Scotish Labour have of sticking up for Scotland?
It's interesting that Unionist position on this appears to be that it is perfectably acceptable for Wesminster to snub Scotland and deny it of its own taxes!
What a strange way Scotish Labour have of sticking up for Scotland?
Westminster do not wish to punish the people of Scotland, they simply wish to make life difficult for the SNP and don't have a care whether or not they hurt the people of Scotland at the same time. This is not a reserved matter, Scotland should not suffer because we choose to have a different (and fairer) local tax system than the rest of the UK.
Just what would Westminster do if it were they changing the local taxtion system and Scotland chose to retain council tax? Would we still lose because of their decision? I suspect we would.
Brown, Browne, Cairns and the rest of the band of fools ought to be more honest just who is picking fights with whom in this dead union.
# 10.....I cannot speak for #2 However when I posted my comment there were NO comments. In Future Norman M please get your facts right before posting OK .......Thankyou.
Stopping the council tax benefit from the Treasury if we scrap the council tax seems fair enough to me, and I agree with your logic, Brian. But it's the kind of issue that provokes phoney outrage and posturing from Scottish ministers and confusion among the voters. Who can tell if English taxpayers subsidise Scotland or vice versa? It's far too complicated. To me, it's the kind of issue which is pushing us towards a federal government or full independence. At the moment we don't really know how rich a country we are, to what extent we can tackle poverty and our other problems, and if or to what extent we are parasites on our English host.
Brian iam glad your not fighting for the Scottish peoples interests!
so brian, who is picking fights now!!...all we want is OUR OWN money
so the numptys think its a good idea to shaft us, think on its mass
suicide,i'm sure voters can reward hand biters,and will be making sure fewer of them are around in future
roll on the next general election.
An interesting debate but can we be confident that our Holyrood hotheads have the ability to ever devise a workable local income tax. They may try to use a working example from another country but this will only involve a lot of expensive junkets to all these other countries. No doubt much money will also be expended on feasibility studies , working groups etc etc . I doubt we will ever see it as no doubt the political balance of power will change long before any scheme comes anywhere near fruition and the whole proposal will be scrapped.
Sorry Collyer, but if you were to do a full and accurate fiscal calculation for both Scotland and England, you would find that It is us Scots who generate more capital towards the GDP per head of population. However, you would have to acknowledge that many Scots who work in large organisations North of the border, contribute to companies and organisations which have their headquarters and subsequently register their tax returns in London.
BP, Shell etc are all registered in London despite a very large % of the actual industry being in Scotland. Therefore, these taxes do not indicate an accurate representation of who is actually generating them or where indeed they are being generated.
Scotland has masses more natural resources per head of population than England and independance would show this as very much the case.
But hey, I am not too fussed about your motive for 'wanting rid of us'... just happy to support your wishes.
Cheers mate!
On national television on the 27th of October 2007 Alex Salmond proposed the following:
''Scotland should raise all it's own revenue and be in chatge of all it's own expediture, and that England should raise all it's own revenue and be in charge of all it's own expenditure,that would be fair and equitable to both nations on both sides of the border''
He mentions this proposal no less than THREE times duriung the brief interview.
No unionist politicians seem to be able to raise a credible retort to Alex Salmond's proposal, perhaps their supporters can?
Brian, the LIT issue is just another issue which would be easily maintained should we choose to raise and spend our own revenue.
Craig
Why not let each country keep monies raised from stamp duty on house sales be used to fund the council tax / local income tax.
In 2005 stamp duty raised 拢250 million in Scotland against 拢6 billion in England.
Yet another argument about wealth redistribution - and as usual the middle classes will pay more.
How about a more constructive debate in Scotland about wealth creation and how the success Ireland have had with their economy can be replicated.
I fear that Scotland has become too dependant on cash from the state and driving up taxes will drive talent out of Scotland.
Should the Nats get their way with independance - a culture change will be required for Scotland to prosper.
A couple of pragmatic thoughts on LIT, the first of which relates to housing. One way of rapidly addressing the current housing crisis is by increasing council tax to say 300% of 'normal' level for empty houses (about 5% of the total Scottish housing stock). Revenue generated by local authorities could be fed back into affordable housing projects. It would also have the effect of encouraging absentee owners to bring their houses into rentable standard (using existing grant schemes) or to sell them on. But this "easy option" would be lost (along with existing schemes for holiday home taxation) when/if LIT was introduced.
My second thought is about the ageing population. I hope someone has considered the LIT implication of a significantly higher % of retired folk living off their (often meagre) pensions.
Looks like the approved phrase from the SNP drones is "sticking up for Scotland". But without the SNP's policy of replacing council tax with extra income tax, there's no threat to "our money". Knowing the consequences, the SNP are choosing to give it away.
I pay my UK and local taxes, and accept that some of them should be spent helping low-income families to pay council tax. That's what council tax benefit is for.
I don't see why the SNP should be allowed to divert this money from poorer people to help them to reduce the rate of income tax that they need to charge - most of the benefit of an income tax subsidy would go to higher income families.
(Cutting the tax rate by 1%, a family earning 拢100,000 would gain 拢1000, while a family on 拢10,000 would gain only 拢100.)
#30 Archie - no understanding whatsoever. Not proposing a cut in income tax rather a 3p in the 拢 rise to replace the council tax. So judging by your complaints about the effect of a cut - you will be all in favour of the family on 拢100,000 paying 拢3000 extra as opposed to 拢300 extra for those on 拢10,000 (bearing in mind the removal of average council tax bill of 拢1100-1200).
Northern Ireland doesn't have council tax but still gets this money. There is no justification for not treating Scotland in the same way. This is just Labour picking another fight with Holyrood.
I am a single guy on 拢34,000 p.a.
If the 3p/拢 was introduced I would be paying 拢1020 p.a. This is only slightly more than the 拢930 p.a. I currently pay (includes my 75% single persons discount).
I would suggest that I earn slightly above average wage and am more or less the same well off. However, where this really comes into it's own is for those who are less well off. For a family of four on 拢25K p.a. the benefit is clear.
I would prefer a fair system of tax even at a cost to myself.
...Can pay, should pay !!!
There is no logic in the Government's position.
Council tax benefit is actually a subvention paid directly from the Treasury to local authorities.
Why should Scottish local authorities be stripped of the subvention while English local authorities continue to receive it?