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Council tax study to be published 'Replace council tax' says report
(about 4 hours later)
The long-awaited report of the independent committee set up to review local taxation in Scotland is due to be published. Council tax should be replaced with an annual charge based on property value, according to a long-awaited report into local taxation in Scotland.
Sir Peter Burt's two-year long inquiry is reported to recommend replacing council tax with an annual charge based on about 1% of a property's value. The "A Fairer Way" report by the independent local government finance review committee said the tax should be based on about 1% of a home's value
The formula was swiftly rejected by the first minister and the main parties. The study was headed by former Bank of Scotland chief Sir Peter Burt.
The Scottish National Party said the Burt review had turned out to be an "expensive waste of money". The formula was swiftly rejected by First Minister Jack McConnell and the main parties.
On Wednesday, a leak from the Burt report suggested householders could be asked to pay about 1% of the value of their home every year in tax. The charge would equate to an annual 1% tax across Scotland if councils wanted to raise the same amount as the council tax.
We will need to consider the independent review in detail once published, but if this is the main proposal, it will not be given the time of day Source close to first minister However, the tax rate would vary between local authorities.
The proposals would result in an annual bill of £1,300 or more for the average Scottish house, which now costs more than £130,000. Better off
But before the report was to be published, the recommendation was ruled out by Mr McConnell, at a regular meeting of Labour ministers. Even before the report was published, sources close to Mr McConnell said: "There is no way that Labour ministers will support a 1% homes tax."
A source close to the First Minister said: "There is no way that Labour ministers would support a homes tax. Launching the study in Edinburgh, Sir Peter denied the findings were already dead in the water.
"We will need to consider the independent review in detail once published, but if this is the main proposal, it will not be given the time of day." Under the committee's proposal, he argued, 45% of the population would be better off and 20% would be no worse off.
Let's see what the first minister has to say once there has been mature reflection Sir Peter Burt
Sir Peter said: "I find it very hard to believe that once people have had a chance to reflect on it, they will not see the merits of what we are proposing."
He added: "Let's see what the first minister has to say once there has been mature reflection."
The proposals would result in an annual bill of about £1,300 or more for the average Scottish house, which now costs more than £130,000.
The report concluded that the council tax system is beyond repair and that a local income tax - which it calculates would be about 6.5% - is not the answer.
The committee took two years to reach its findings, at a cost to the Scottish Executive of £270,000.
'Farcical situation'
Labour ministers still favour a form of property tax but not along these lines and the party has long advocated reforms which would see additional bands added to the present council tax.Labour ministers still favour a form of property tax but not along these lines and the party has long advocated reforms which would see additional bands added to the present council tax.
The proposal for a 1% home tax was also condemned as "absolutely ludicrous" by SNP finance spokesman John Swinney. The Scottish National Party said the review had turned out to be an "expensive waste of money"
Fair system Finance spokesman John Swinney said: "We now have the farcical situation where the first minister has established a two-year commission that has wasted taxpayers' money and reached a conclusion which the first minister has been forced to rubbish before it has even been published."
Mr Swinney said: "We now have the farcical situation where the first minister has established a two-year commission that has wasted taxpayers' money and reached a conclusion which the first minister has been forced to rubbish before it has even been published. Mark Ballard MSP, Green finance spokesman, said: "The recommended system would be an improvement on the current one."
"It is clear that this has been a political fix to paper over the cracks between Labour and the Lib Dems and taxpayers' of Scotland have had to pick up the tab.
"What we need is a fair system of taxation based on a person's ability to pay, not more reports which waste time and money."
The committee is headed by Sir Peter Burt, a former senior figure with the Bank of Scotland and executive deputy chairman of HBOS until his retirement in 2003.