initial response to local income tax proposals
JUNE 2008
A Fair Local Tax for Full Time Students?
CHESS believes that the Local Income Tax proposals, as they currently stand, do not result in a fair tax for full time students.
Widening Participation Backgrounds
Full time students from the poorest backgrounds will be hardest hit with the introduction of the proposed local income tax. While many students are supported by their families during their studies, there are significant numbers that this is not available to. It is these students the Government encourages to attend Higher Education Institutions through the widening-participation agenda, so it would seem inconsistent to be unfairly punishing them through the proposed Local Income Tax.
The majority of students undertake part-time employment during term-time and full-time employment during vacations to support themselves through their studies. Without this source of income, many students would not be able to enter Higher Education or would likely have to abandon their studies
Taxing them through a local income tax would be incredibly unfair – it would:
1) Force poorer students to work more hours to recoup the money that is being taken away from them through the tax, thereby leaving less time for them to prepare for their academic work.
2) Contradict the government's widening access policies designed to facilitate students from the poorest backgrounds entering higher education.
3) Add to overall student debt – contradicting the Scottish Government’s manifesto promises to ‘dump the debt.’
The scale of the problem should not be understated. The Halifax recently concluded that 67% of full time students in Scotland work to support their studies . It has been estimated that 55,000 of Scotland’s poorest students will be affected. Students are already earning over the personal allowance during the Academic Year and in the most recent surveys, students earn over £8,000 throughout the year. Students are therefore a group in society who will be disproportionately affected by the proposed Local Income Tax.
Dumping the Debt?
CHESS believes that the Scottish Government’s statement on this issue that reads “the vast majority of full-time Scottish students will pay absolutely nothing” contradicts the SNP’s unambiguous pledge to ‘dump the debt’.
The Scottish Government should show their support of and commitment to access to Higher Education as a level playing field as well as recognising the current and future contributions Higher Education students will provide to the social, economical and commercial fabric of Scotland.
Their statement also ignores the fact that students are currently exempt from the payment of water charges, but under the proposed system this exemption would be removed – incurring charges of between £250 - £700 per year. This is a prohibitive cost for some of the lowest earners in Scotland.
The spirit of the legislation being discussed at present is completely in contradiction with the pre-election promises which encouraged many full time Scottish students to vote for the SNP in the belief that an SNP government would obliterate student debt.
Part-Time Students
CHESS acknowledges that some part-time students may be better off with the local income tax proposals. However, more should be done to encourage part-time students who are completing more than 60 credits of work (or the equivalent) per annum. These are students who are expected to complete twenty hours of academic work in a week, and often forced to work long hours to support themselves.
A ‘fairer’ local tax would acknowledge this fact, by giving these students a higher personal allowance threshold.
Conclusions
CHESS calls upon the Scottish Government to give full time students exemption within the proposed Local Income Tax proposals, in the same way that full time students are currently exempt from paying council tax
CHESS calls on the Scottish Government to give part time students who are studying more than 60 credits (or the equivalent) a year a personal allowance threshold of £9,030 in recognition of their student status.
Further consideration must be given to the impact on the benefits system of the Local Income Tax.
Should these two ideas be adopted into the proposals, then CHESS supports the ideas that are included within the proposal.
