Magazine article Public Finance

Doubts Cast over Scots' Power to Levy LIT

Magazine article Public Finance

Doubts Cast over Scots' Power to Levy LIT

Article excerpt

A dispute has broken out between the Scottish government and the Treasury over whether ministers in Edinburgh have the power to levy a nationally set local income tax.

The difference of opinion over the flagship policy of the Scottish National Party administration emerged this week after a meeting between Chief Secretary to the Treasury Yvette Cooper and Scotland's Finance Secretary John Swinney.

The talks in London on April 1 focused on a number of issues, including Cooper's concerns over a £750m 'black hole' in the LIT plans and Swinney s insistence that the £400m Scotland currently receives in council tax benefit should be retained after council tax is abolished.

It emerged later that the Treasury believes the Scottish government does not have the power to implement its proposals for a nationally set LIT levy of 3p in the pound.

A Treasury source told Public Finance it recognised that the Scottish administration had the right to change the local taxation system. But he added: 'The proposal in the consultation paper is for a 3p in the pound tax, set centrally and administered and collected nationally by Revenue & Customs. In that situation, it is not a devolved matter in terms of the Scotland Act. …

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