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The commitment by the Scottish Executive to embark on the long awaited review of local government finance has been welcomed by the Convention of Scottish Local Authorities.

COSLA has consistently expressed concerns about the democratic deficiency of current funding arrangements - ie councils being responsible for 100 per cent of their spend but less than 20 per cent of their income.

Welcoming the finance minister's announcement yesterday (see below) in which he outlined the role and remit of the group set up to look into the issues COSLA president Pat Watters, said: 'We welcome this review of local government finance in Scotland, as well as addressing the democratic deficit there is an urgent need to refine the current council tax arrangements to bring them up to date.

'I fully appreciate that the group should be independent of both local and central government but would stress that the role of COSLA is fully recognised and we are treated as a full partner not simply as a consultee.

'I have to say on this that the early signs are positive and we are meeting the minister for finance and public services tomorrow (Thursday) to thrash out some of the key issues in greater detail.'

Press release from the Scottish Executive follows

Local taxation review

The independent review of local government finance was launched on Wednesday.

It will examine different forms of local taxation - including reform of council tax.

The review will look at the impact of any changes, including the implications for the rest of the local government finance system and any wider economic consequences.

The membership of the review team, reporting to ministers, will be announced to parliament shortly.

Minister for finance and public services Andy Kerr said:

'The focus of the review will be on local taxation and will examine the impact of any possible changes, including reform of the council tax. It will be thorough and considered, the most serious examination of local taxation ever undertaken in Scotland in recent times.

'This independent review fulfils our partnership agreement pledge and highlights our ambitious approach to public services, built on investment, reform and modernisation.'

Deputy minister for finance and public services Tavish Scott said:

'Local authorities are at the frontline and ensuring the people of Scotland get the level of public services they expect and deserve. This independent review will examine different forms of local taxation.

'All those who have something to say should bring the details of their proposals to the inquiry table, argue their case and see those plans scrutinised. The time for slogans has passed. The time for details has arrived. To win change, participants will need to be thorough, persuasive and thoughtful.'

Remit of Review

To review the different forms of local taxation, including reform of the council tax, against criteria set by the executive, to identify the prosand cons of implementing any changes to the local taxation system in Scotland, including the practicalities and the implications for the rest of the local government finance system and any wider economic impact, and to make recommendations.

Core issues for systems of local taxation

The issues that the review will need to examine for each system are:

* Effect on the economy/economic growth

* Ability to pay/fairness

* Ease of avoidance/collectability

* Stability/predictability

* The relationship to the benefits system

* Balance of funding

* Buoyancy

* Accountability

* The cost of collection

* Who collects the tax

* Shift to a new system: timing and transitional arrangements

Systems to be examined

* Council tax (current and reformed)

* Local income tax (locally and nationally set)

* Land value tax

* Options for local business taxation

* Any other appropriate models

The associated issues are:

* Business rates

* The impact on the current GAE/RSG system

* The mechanism for distributing grant between authorities.

* The relationship to domestic water and sewerage charges

* Reserved issues

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