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Local income tax a mistake says think-tank |
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Thursday, 20 September 2007 |
Introducing a local income tax would be drive away high income earners and damage council efficiency according to a report released today by the Policy Institute.
The think-tank acknowledges that council tax is in need of reform, but warns that a local income tax – the preferred option of the SNP – would be counter-productive.
Tom Miers, executive director of the Policy Institute, said:
“A local income tax would leave the accountability and efficiency of local government fatally undermined. Councils would no longer be able to set rates of taxation and a crucial link between voters and government would disappear. Even if a council succeeded in cutting costs it would have no way of returning the savings to taxpayers. We would be stuck with the current high levels of spending forever.
“A local income tax would hit high earners for thousands of pounds. But high earners are also highly mobile. Increasing income tax by 3p in the pound is simply inviting these people to leave Scotland, or avoid it in the first place. UK companies with a presence on both sides of the border will recruit senior staff to offices outside Scotland. The tax could therefore damage the economy twice over - by driving wealth creators away and diverting business to other parts of the UK.”
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