Henry McLeish today pointed out the bleeding obvious: that the £400m in Council Tax Benefit should stay in Scotland to offset local taxes, irrespective of the model Parliament eventually backs. Like Henry, I don't think the SNP plans as proposed are the right solution, but that's a different question.
The fact is that this money comes from tax receipts collected in Scotland as well as elsewhere in the UK. Sure, the legislation limits the taxes it can be applied to, but I'd bet the Block Grant that legislation would be changed if a Labour First Minister wanted to amend local taxation.
Let Labour make the case against Local Income Tax. There's plenty of material there, just as there is with the Council Tax. But simply to threaten to withdraw this money is pure petty-minded-ness, not to mention bad politics. Why give the Nats a new grievance to play with? Don't Labour understand that's still a key part of the way the SNP expects to achieve independence? (Labour understanding of independence pictured above)
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