Magazine article Public Finance

Public Sector Bodies Warn LIT Will Cause £742M Funding Gap

Magazine article Public Finance

Public Sector Bodies Warn LIT Will Cause £742M Funding Gap

Article excerpt

Public finance and chief council officers have warned that the Scottish Government's plans for a local income tax would create a funding gap of ?742m, partially remove fiscal autonomy from local government and breach a European treaty.

In a joint response to the Scottish Government's consultation paper on LIT, CIPFA, the CIPFA Directors of Finance Section and the Society of Local Authority Chief Executives and Senior Managers argued that the potential shortfall could hit other local government and public services.

The criticism of the proposals by two leading public sector professional bodies is the latest setback for ministers, who want to introduce a centrally set LIT of 3p in the pound for Scotland's 32 local authorities.

Several other professional accountancy and revenue bodies have put forward similar reservations. The consultation ended on July 18.

The joint submission said the proposals would result in a £308.6m loss in tax yield - the difference between the present income from council tax and that estimated from LIT. There would be a further loss of ?433.5m currently paid by the UK government in council tax benefit. …

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