diff --git a/Tag.cpp b/Tag.cpp
index 1e89d63..f46b95e 100644
--- a/Tag.cpp
+++ b/Tag.cpp
@@ -51,7 +51,7 @@ namespace jet {
 		 if(!finished) {
 		    coreutils::ZString keywordName = in.getTokenInclude("ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789-_");
 		    if(in.ifNext("=\"")) {
-		       variables[keywordName] = KeywordValue(in.getTokenExclude("\""), global, variables);
+		       variables[keywordName] = KeywordValue(in.getTokenExclude("\""), global, parent->variables);
 		    }
 		    if(!in.ifNext("\"")) {}
 		 }
diff --git a/__set.cpp b/__set.cpp
index dbcdd15..ef814b6 100644
--- a/__set.cpp
+++ b/__set.cpp
@@ -17,22 +17,33 @@ namespace jet {
 	throw coreutils::Exception("set tag cannot have both expr and value.");
       if(!variableDefined("expr") && !variableDefined("value") && !hasContainer)
 	throw coreutils::Exception("set tag must have a value, expr or a container.");
-      if(!variableDefined("scope") || (variables["scope"] == "global")) {
-	 if(variableDefined("expr")) {
-	    if(variableDefined("eval"))
-	      throw coreutils::Exception("Cannot use eval with expr.");
-	    global.variables[variables["name"]] = Operand(variables["expr"]).string;	    
-	 } else if(hasContainer) {
-	    processContainer(container);
-	    if(evaluate) {
-	       global.variables[variables["name"]] = out;	       
-	    } else {	   
-	       global.variables[variables["name"]] = container;
-	    }	    
-	 } else
-	   global.variables[variables["name"]] = variables["value"];
-      } else {
-	 
+      if(variableDefined("expr") && variableDefined("eval"))
+	throw coreutils::Exception("Cannot use eval with expr.");
+
+      if(variableDefined("expr")) {	   
+	 if(!variableDefined("scope") || (variables["scope"] == "global")) 
+	   global.variables[variables["name"]] = Operand(variables["expr"]).string;
+	 else if(variables["scope"] == "local")
+	   variables[variables["name"]] = Operand(variables["expr"]).string;
+      } else if(hasContainer) {
+	 processContainer(container);
+	 if(evaluate) {
+	    if(!variableDefined("scope") || (variables["scope"] == "global")) 
+	      global.variables[variables["name"]] = out;	       
+	    else if(variables["scope"] == "local")
+	      variables[variables["name"]] = out;	    
+	 } else {
+	    if(!variableDefined("scope") || (variables["scope"] == "global")) 
+	      global.variables[variables["name"]] = container;	       
+	    else if(variables["scope"] == "local")
+	      variables[variables["name"]] = container;	    
+	 }	    
+      } else {	 
+	 if(!variableDefined("scope") || (variables["scope"] == "global")) 
+	   global.variables[variables["name"]] = variables["value"];	       
+	 else if(variables["scope"] == "local")
+	   variables[variables["name"]] = variables["value"];	    
       }
+      
    }      
 }
diff --git a/test1.jet b/tests/test1.jet
similarity index 100%
rename from test1.jet
rename to tests/test1.jet
diff --git a/testdb.jet b/tests/testdb.jet
similarity index 100%
rename from testdb.jet
rename to tests/testdb.jet
diff --git a/testfor.jet b/tests/testfor.jet
similarity index 100%
rename from testfor.jet
rename to tests/testfor.jet
diff --git a/testinclude.jet b/tests/testinclude.jet
similarity index 100%
rename from testinclude.jet
rename to tests/testinclude.jet
diff --git a/testjet.jet b/tests/testjet.jet
similarity index 100%
rename from testjet.jet
rename to tests/testjet.jet
diff --git a/tests/testscope.jet b/tests/testscope.jet
new file mode 100755
index 0000000..2a7125a
--- /dev/null
+++ b/tests/testscope.jet
@@ -0,0 +1,8 @@
+#!./jet-2.0
+<jet cgi="true" name1="localname" filterblanklines="true" trimlines="true">
+ <set name="testvar" value="do you see this" scope="local" />
+ #[testvar]
+ <for name="ix" start="1" end="5" step="1">
+  -->#[ix]<--
+ </for>
+</jet>
diff --git a/testtag.jet b/tests/testtag.jet
similarity index 100%
rename from testtag.jet
rename to tests/testtag.jet
diff --git a/testvar.jet b/tests/testvar.jet
similarity index 97%
rename from testvar.jet
rename to tests/testvar.jet
index 69d8a7e..dbbc255 100755
--- a/testvar.jet
+++ b/tests/testvar.jet
@@ -1,4 +1,4 @@
-#!./jet-2.0
+#!../jet-2.0
 <jet filterblanklines="true" trimlines="true">
 <set name="ix" value="1" />
 <set name="letterx" value="x" />