Portillo agrees with Salmond over local income tax

I notice that Michael Portillo has come out in favour of local income tax.
Earlier this week the SNP announced as part of its fiscal policy that it would scrap council tax and introduce a local income tax in its place.

Portillo writing in the Sunday Times this morning says that

The debate may well be confined to Scotland and to how it will shape attitudes to independence there – but it should not be. If we altered the way local authorities raise their money, we would change the nature of our country for the better

Portillo brings out the two arguments for it that it allow a greater degree of social justice and that more importantly

raising the money in that way would enable local government to grow in scope and importance. By comparison with almost every country I know, we suffer from chronically weak local government and from central government that is too powerful

A radical plan north of the border

Will the Scottish nationalists be able to bring in their radical fiscal measures north of the border?

Alex Salmond's package introduced to the Scottish Parliament on Wednesday has created headlines north and south of the border.The biggest being over the plans to scrap council tax and introduce a local income tax instead which will put around 3p on the basic rate.

It will need support from the minority parties if to become legal and the Scotsman is reporting this morning that Nick Clegg has come out in support for the scheme,although would prefer individual authorities to set the rate rather than a blanket nationwide rate.

The measures have already come in for a fair amount of criticism from across the political spectrum not least that it will hit the very voters that put Salmond in power,the Middle classes.Research from the nationalists suggests that only those earning over £70,000 will be worse off under the proposals.This though has been disputed by other surveys which suggest a far lower figure.

The main opposition is that it will create a fiscal black hole leaving Scotland around £400m worse off,money that will have to come from Westminster to maintain spending at current levels.Then the arguments that it will benefit the wealthy that live off investments untaxed.

If it does come in,probably in 2011,it will create a two tier tax system in the Uk.Tax systems the critics argue will discourage investment north of the border as well as setting up a complex tax system.For example what happens where Scots work in England?

Nevertheless,it is an interesting and radical proposal and events north of the border will be worth watching.