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21 Jul 2008
The most damaging criticism yet of the Scottish government’s plans to replace the council tax with a local income tax (LIT) has come from a report released by the Chartered Institute of Public Finance and Accountancy (CIPFA) and Society of Local Authority Chief Executives (SOLACE).
Their report says the figures do not add up and warns that, besides a funding shortfall there are questions over the policy’s legality. Removing local control over taxation, they warn, could ‘compromise’ the existing agreement between councils and government on spending and be in breach of European legislation, The Times reports.
They urge ministers to extend the four-month consultation on LIT, which officially closed on Friday and recommend a fairer council tax with more bands, possibly supplemented by a limited LIT.
Moreover, Bob Ainsworth, the UK armed forces minister, last night said LIT would punish about 5000 service personnel in Scotland whose council tax was largely paid by the Ministry of Defence.
Further reading:
Law expert warns MSPs of ‘poll tax’ scenario
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Scottish LIT
I am unclear how LIT is going to affect me. I am a sole company director and sole shareholder of my limited company. To reduce the amount of income tax I have to pay I pay myself a salary of £6,000 and take the remainder of my income(£60,000) in dividends. Does this mean that I will pay little or no LIT?
Posted by: Tony Dugdale, 21 Jul 2008 | 00:00