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Loadsa luck, pal

Brian Taylor | 12:22 UK time, Tuesday, 5 August 2008

The story is no doubt apocryphal - but it bears repetition nonetheless.

Roughly a thousand years ago, the Conservative government was agitating, especially in Scotland, about the system of collecting local taxation from the citizenry.

It consulted an international expert on such matters. Said expert examined the options then pronounced: "Tell me more about these rates. We do not have them in my country. They sound very interesting."

Bit of a snag given that the object was to replace the rates. The rates were to be scrapped. Their very name had become a hissing and a byword to all right-thinking people. They were bad. They were an intrinsic evil.

And so was born the poll tax.

Now Iain Gray,, says he will urgently convene talks, if elected, to find a method to replace or reform the council tax.

It must be changed. Its very name has become a . . . see above.

You know, this reminds me of nothing more than John Major's campaign to succeed Margaret Thatcher.

He too promised an urgent examination of local taxation. After he won, the poll tax was scrapped - and thus was born the council tax.

Admittedly, Iain Gray wasn't in the last Holyrood Parliament from 2003-07. But, as a special adviser at the Scotland Office, I feel sure he kept up to speed with developments on local taxation.

Indeed, he says that the extensive commissioned by Jack McConnell will form part of his fresh thinking on the council tax - as, presumably, will the proposals for rebanding upon which he stood at the elections last May.

You see the problem, of course. Scotland does not lack reviews. There is no shortage of data, no deficit in the scrutiny department. What is missing is action.

That, in my opinion, for very good reasons. It may not seem like it but local taxation, however framed, bears a very small proportion of the cost of local services.

The financial mechanism known as gearing means, therefore, that any attempt to tinker with local taxation can have a disproportionately big effect. It can skew the charges substantially for individuals or whole sectors of society. Witness the poll tax.

Plus council taxation is not just about the provision of services. There must be equity, efficiency, ease of collection - together with retaining local accounability.

The SNP Government is . Except it isn't truly local. It would be set nationally at a rate of 3p in the pound.

Now that may be equitable - although it wouldn't be levied on savings income. It may be efficient and easy to collect - although that's disputed by some who question the impact on employers and the Revenue.

However, it scarcely enhances local accountability.

Plus there's the issue of council tax benefit. If council tax is scrapped in favour of an allegedly fairer scheme, then what is the case for council tax benefit continuing to be paid by Whitehall?

SNP ministers say it has become an intrinsic part of Scotland's funding set-up and is recognised as such by the Treasury.

It has become, in short, formulaic rather than entirely claimant dependent. But that is, to say the least, open to argument.

Plus, the Lib Dems like LIT - but want it truly local. They don't approve of the SNP system.

Mr Gray indicates he will seek to build a coalition with the Tories who favour council tax reform. And he nods towards the Greens who back land value taxation.

To all our politicians who are trying to wrestle with this problem, may I simply quote the words of that great American comedian, Allan Sherman? Loadsa luck, pal, loadsa luck.

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