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Date: Tues 11 March 2008

'Local' income tax will hit working people and services - UNISON

UNISON today questioned government plans to impose a centralised 3p in the pound tax on jobs and remove from local people their only direct control over local government finance.

UNISON, which represents Scottish local government workers, said the proposals would remove decisions and fund-raising powers from local government. The union also said that the proposed level of the nation-wide tax could leave a £900m hole in local government services and allow the well-off to avoid paying for local services at all.

Matt Smith, UNISON's Scottish Secretary said "The introduction of a further tax on wages will either make many families worse off, or lead to cuts in public services. The government can't have it both ways. They either set the tax at a rate which meets current local government spending - 6.5% according to the Burt review - or local services will be cut. The current 3% proposal falls far short of current spending. Even if money for council tax benefit is secured from the treasury, the tax would have to be 4.5% to cover the hole."

Every worker in a house would pay this tax. The Burt Report states that the tax burden would fall on families with more than one earner: A household with two adults earning £20,000 each would need to pay £2020 per under a local income tax to deliver the same overall amount of money as the council tax - compared with an average £1129 in council tax. The union also criticised the proposals as removing local tax-raising powers, and freeing the rich from paying for local services.

Matt Smith said "A tax that is set by Holyrood and collected by Westminster is not 'local' by any stretch of the imagination. It will also prove to be a tax break for the rich.

"Only 60% of people pay income tax. The tax advisers of the rich will help them minimise their contribution. They will pay themselves in dividends and shares and funding from investments that the Government suggests shouldn't be taxed.

"Local government finance is facing its third reform in twenty years. This new tax on wages and jobs raises a huge number of questions and answers none. Politicians must face reality and deliver a solution that is fair and meets the costs of vital public services. This tax does neither."


For Further Information Please Contact: Matt Smith (Scottish Secretary) 07771 548 997 (m) Dave Watson (Scottish organiser - Policy) 07958 122 409 (m) Chris Bartter (Communications Officer) 0771 558 3729(m)