Election 3rd May 2007

[Beachcomber]

Let me know why and I'll try to get you a more detailed response pm me if you like.

Er, mmm, well apart from being out of a job - I don't think taxing on peoples income is a fair systen either.

I'm with Davie on this one. Taxing people more for local services just because they earn more hardly encourages people to work harder, does it?

It is also disadvantageous to those of us with larger familes as no allowance is made to that larger income being necessary to feed more mouths.

Given that this is money that we've already been taxed on several times. More efficient use of the taxes we already pay would be better.

[Mary G]

The detail on this local income tax proposal must be exposed to be fully understood.

The starting rate of income tax is 10%. You pay that on the first £2,150 of income above the tax-free allowance of £5,035. Under this SNP proposal it would rise to 13% - a 30% increase in the first tax you pay! So, if you work part time, or are a student, and only pay tax at this starting rate, you will be worse off. As a student, you are unlikely to pay council tax, so this is all cash out of your pocket.

Then take a newly qualified teacher, on say around £20,000. They will pay £450 more each year in tax, above what they pay at present. Many young workers stay at home, or share a flat, so any council tax saving could be non-existent, or very small.

The SNP local income tax proposal would mean that the basic rate would be 23% instead of 20%. This means that our basic tax rate would be significantly higher than the rest of the UK. I think that this would drive many of our talented young people away.

I could also add that I think it is extremely dangerous to impose the same 3% across the country – providing councils with absolutely no discretion nor incentive to be efficient. It also endows the rich authorities (Bearsden etc) with lots of money, and the starves the needful councils of funds. And it leaves councils with an estimated combined deficit of £840 million.

The SNP says that they want more people to stay in Scotland, and I do believe their sincerity on this. What I cannot take seriously is their economic competence. This local income tax proposal would drive away young people at a stroke.

[Hume]

Mary, I'm not really well up on this subject yet but it does interest me - treat my comments as inquizative rather than counter arguments.

The 30% hike in tax you refer to on the starting rate band relates to just £64.50 per annum, which is not as bad as it sounds. You rightly say that to students who don't pay council tax this is additional tax but how many students will actually be earning more than the personal allowance per annum - not many I'd say.

How are part time workers worse off here - do they already receive a council tax discount based on earnings? Under the proposed SNP system it looks like someone earning £7,185 (personal allowance plus starting rate band) will only pay 3% of £2,150 per annum (£64.50) as opposed to the say the £1,000 (or their share of) they pay at present. Pensioners will be in a similar position surely.

I don't understand your example of the newly qualified teacher either. Currently someone earning £20,000 pays £3,034.30 plus council tax. Under the new system they will pay £3,226.45 in total. So unless their Council tax bill is currently less than £192.15 they will be better of under the SNP system. I may be wrong but how do you arrive at the fact they will be £450 worse off?

If as you say basic rate tax is to rise to 23% then I don't think this is significantly higher than the rest of the UK, which is 22% not 20% as you have said. Therefore I don't think this will be enough to make people up sticks for England or whereever. Could it be that they plan to charge 25% on the basic rate band? - in which case add a further £256.30 to the amount of tax the person on on £20,000 in my example would pay.

Do they propose to increase the higher rate band to 43% tax?

In terms of the point on the councils, the so called richer areas will already have more money based on the property bandings and as it is the highest earners who will end up paying more tax this won't change. Whether this is right or not I'm not sure as Davie P says do these people get more for their money. I have to agree the answer is no.

However it is not right either that a couple with joint earnings of £25,000 pay the same as a couple with joint earnings of £70,000 just because their property was roughly the same value in 1991. Perhaps it is the link to property values that is the problem here. That doesn't dictate your ability to pay.

You mentioned Bearsden and I know there are people living there, perhaps widowed who, granted, have property worth £300,000 + but have income of not much more than £100 per week. How can they afford to pay £1,500 per annum to Glasgow City Council?

Perhaps a combination of the two systems would work where we pay say £400 - £600 based on the property value plus a percantage of earnings.

[Beachcomber]

You mentioned Bearsden and I know there are people living there, perhaps widowed who, granted, have property worth £300,000 + but have income of not much more than £100 per week. How can they afford to pay £1,500 per annum to Glasgow City Council?

An equity release loan.

If you're sitting on a £300,000 house with no mortgage and a low income then why should the state and other taxpayers subsidise you?

By releasing equity from the property they may also find that when they die their estate would no longer fall foul of inheritance tax.

[Hume]

Because the ability to pay council tax/local income tax should not be determined by a gross assets test.

I'm fully aware of IHT laws but to take an equity release loan and say that will help your IHT position is a bit like saying "I've lost my job buy hey at least I don't have to pay income tax now"

[Mary G]

Hume

First – you are right on the basic rate of 22% - I was playing around with the spreadsheet, hurrying, copying and pasting, and made a mistake on quoting the percentages – sorry about the confusion. And I am inquisitive too, so here goes!

On the point of substance, the proposal is for 3% to be added at each of the tax brackets. So 10% starting rate becomes 13%, basic rate of 22% becomes 25%, and then higher rate of 40% becomes 43%.

No-one knows exactly how many students / low earners will be affected, but it remains the case – as you agree - that some will be worse off. So SNP assertions that only the top 10% of earners would be paying more are wrong, in my view.

The way I reached the £450 for someone on £20,000, is that the 3% goes onto each tax band rate. So I agree with you, that it is an extra £64.50 on the first tax bracket, taxed at 13% instead of 10%. Then an extra £384.45 tax on the income between £7,185 (tax free allowance + £2,150 taxed at the starting rate) and £20,000, which is £12,815. The tax on this is £3,203.75, instead of £2,819.30 as at present. So adding the two extra amounts: £64.50 plus £384.45 makes £448.95, which I rounded up to £450.

My point is that I know young people on these incomes who stay at home, or share a flat, and pay nothing, or a lot less than £450 towards council tax. So they will be worse off, and I think that we need to encourage this group of people to stay in Scotland. Things that could deter some people from staying here need to be considered very carefully before they are introduced. I don’t think that this flat rate of 3% across the board has had anything like careful consideration, and that is surely pretty damning.

I agree that the council tax is not perfect, and there is always scope to improve it. Your idea of a hybrid is interesting. Also, I think that lots of people paying tax at the new top rate of 43% would suddenly find that they had non-Scottish addresses as a means of paying only the 40%. It would be based on your place of residence, not your place of work.

[The Hitman]

Perhaps they are both standing as independents, I know the Independent Group who currently lead the council have been approaching local worthies to stand as independents, as have the Conservative and Unionist Party, who have approached at least 2 other people.

By this quote John S do I assume you are branding the two prospective Councillors worthies????

Must say I find that quite shocking considering that you may be working with them should Cllr Kelly and Jim Martin be elected along with you?

Surely it makes more sense for the people willing to represent us work in a friendly and efficient manner rather than get bogged down in trying to score party points!!??

I feel the people of Kintyre should be voting for the people who will stand up for our community and fight for us to ensure we get everything we are entitled to.

All this party politics stuff just frustrates me, as when it comes to local government and which party you stand for - people should be standing for their communties first and foremost.

I shall be casting my vote in order of the candidates credentials and their ability to get a job done, the way they conduct their business and their reliability.

I certainly shall not be voting for candidates who would appear to try and belittle other candidates as this show's weakness and obviously a a lack of ability to work as part of a team.

I'm sure everyone is able to see who has served the people of Kintyre well over the last 4 years and who has not, it's not brain surgery.

Anyway I'll just need to wait and see each campaign and judge it on it's merits and make my decision. Exciting times for the people of Kintyre!!

[Hume]

Mary, I see, you meant £450 more income tax, whereas I thought you meant £450 more tax in total (income plus local income tax).

So it's really a question of should someone earning £20,000 be paying less than £450 in council tax. If the reason they are paying less is because they live with their parents or in a flat with say four others, thus splitting the cost then I'd have to disagree. Surely it is us who should be taxed, rather than our properties?

The person staying with their parents gets as much use of council money as their colleague who has a flat of their own.

[Mary G]

Hume

My main issue is with the statement that the SNP used to introduce this proposal: “only the richest 10% in Scotland will pay more”. This is clearly not the case when you start to unpick the detail. A student and the newly qualified teacher in my illustration would both be worse off, as just two examples. They are not – by any stretch of the imagination – in the top 10% of earners.

Of course there would be winners and losers. Self-employed people who do not pay corporation tax, but rather pay income tax, would be another group to fare worse, in certain circumstances. So, many farmers, fishermen, builders and similar workers, whose profits constitute their income, would not benefit from the SNPs proposed cuts in corporation tax. At the same time their income tax payments would rise. Only a case by case comparison of whether this was greater or lesser than their contribution to Council tax could determine if they were in the winner's enclosure. Or not.

It is a complex business working out exactly who gains and who doesn’t, depending on income, employment, property, council area, family circumstances, and so on. To say that only the top 10% would pay more is plainly wrong.

Now, as to who should pay (viz the newly qualified teacher staying with her/his family), and how much, then that is a totally different discussion! It is worth remembering that local services are funded by both local taxes (in whatever shape or form) and central grant funding. So people who currently pay no council tax – for whatever reason – still contribute. And not just if they pay income tax. VAT, petrol duty, airport taxes etc – all make their contributions towards paying for local services.

[Beachcomber]

Because the ability to pay council tax/local income tax should not be determined by a gross assets test.

I'm fully aware of IHT laws but to take an equity release loan and say that will help your IHT position is a bit like saying "I've lost my job buy hey at least I don't have to pay income tax now"

Maybe, but you did ask the question, and it is a valid solution for retired people with inadequate pensions.

[Hume]

It is a complex business working out exactly who gains and who doesn’t, depending on income, employment, property, council area, family circumstances, and so on. To say that only the top 10% would pay more is plainly wrong.

Mary

I'll agree with you on these two points, but doesn't that kind of mean your point about self-employed people being worse off "in certain circumstances" also has a another side to it?

Self-employed people who do not pay corporation tax, but rather pay income tax, would be another group to fare worse, in certain circumstances. So, many farmers, fishermen, builders and similar workers, whose profits constitute their income, would not benefit from the SNPs proposed cuts in corporation tax.

Cuts in corporation tax will of course give small businesses a boost but it could also mean business owners paying more local income tax as two of the main ways to extract profit from a business are via earnings or dividends, both liable to income tax. Obviously there are other ways like pension funding, which is more tax efficient.

On the point of dividends, do you know, does that mean the SNP propose to raise higher rate tax on dividends to 35.5% from the current 32.5%?

[John S]

With any new taxation system there are winners and loser, this is a more socially responsible taxation system than your council tax Mary, since on the whole the small proportion of losers to winners are in a more financially secure position. The introduction of this system will be a significant piece of work in the first years of the SNP administration and I dare say there will be more detail required. Alistair Allan our western Isles Candidate has calculated the following based on current council tax levels in his area.

- A pensioner on their own, with an income of £5930, pays £500 Council Tax just now. Under the SNP's proposals, they will pay NOTHING. They will be £500 better off.

- A pensioner couple with a joint income of £9050 (currently paying £777) will pay NOTHING. They will be £777 better off.

- A single nursery nurse earning £15,000 (currently paying £500) will be £201 better off.

- A family where there is one full-time worker and one part time, earning

£24,755 and £7,730 respectively (currently paying £999) will be £327 better off.

- A family with a teacher and police officer earning £30,000 and £24,813, (currently paying £1443) will be £101 better off.

[John S]

Perhaps they are both standing as independents, I know the Independent Group who currently lead the council have been approaching local worthies to stand as independents, as have the Conservative and Unionist Party, who have approached at least 2 other people.

By this quote John S do I assume you are branding the two prospective Councillors worthies????

Must say I find that quite shocking considering that you may be working with them should Cllr Kelly and Jim Martin be elected along with you?

Hitman, I've worked with both Jim and Donald before and would have no problem in the future. The worthies I speak of are not named candidates, yet.

[Mary G]

John

It is often possible to identify scenarios that will back up the view that you want to put across. Anyway, from these examples, if the “teacher and police officer” family stayed in the “£999” banded house, and instead of the “£1,443” one - entirely feasible, I suggest - then they would be worse off to the tune of £343.

I agree, there are always winners and losers if systems like these are changed. I am not saying that any of these people should/ should not pay less/ more. My issue here is that it has been dishonest is for the SNP to claim that: “only the richest 10% in Scotland will pay more”. This is plainly not true, as surely you must concede.

[abbey craig]

dont vote labour theyve nothing in common now with the working classes

vote socialist its the only way ahead.