The Scottish Government today dismissed as "nonsense" a Treasury claim that its flagship local income tax policy could not be implemented.

The Scottish Government today dismissed as "nonsense" a Treasury claim that its flagship local income tax policy could not be implemented.

The policy falls foul of the Scotland Act, which set up the devolved settlement, since the tax would be set and collected centrally, the Treasury reportedly said.

But justice minister Kenny MacAskill insisted this view was wrong and accused London of trying to undermine the policy.

The SNP policy is for a local income tax set at 3p across Scotland.

Under the devolution settlement, local government finance is a devolved matter.

But a Treasury spokesman said: "It has to be set, spent and collected locally to be a devolved matter.

"There would have to be a change under the Scotland Act to change this definition if (the Nationalists) wanted to introduce a properly devolved tax.

Mr MacAskill told BBC Radio Scotland the Treasury view was "nonsense".

He said: "We as a government are getting on and replacing the unfair council tax with a fair system of taxation based on ability to pay, a local income tax."

He went on: "The Treasury would be better off sorting out their own mess of abolishing the 10p tax rate which is going to make the poorest in our society poorer, and jeopardise Scotland much more."

The justice minister went on to insist "We are not in breach of the Scotland Act.

"And the Treasury should sort its out mess out and let us deal with sorting out the mess we have inherited of an unfair council tax.

"We are intent on changing the council tax for a fair system of local income tax.

"The Treasury in the interim is seeking not only to seek to undermine our efforts to address the unfair council tax, they have actually made matters significantly worse for every taxpayer by the abolition the 10p tax.

"Perhaps they would be better to stop trying to bully the Scottish Government when it's getting on with making Scotland fairer and tackling the underlying problems they have created."