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Meeting of the Parliament 25 April 2013

25 Apr 2013 · S4 · Meeting of the Parliament

Item of business

Land and Buildings Transaction Tax (Scotland) Bill: Stage 1

Hepburn, Jamie SNP Cumbernauld and Kilsyth Watch on SPTV

I welcome this stage 1 debate. The bill is, of course, the first of three bills arising as a consequence of the Scotland Act 2012, and I look forward to scrutinising the other bills when they come before the Finance Committee.

I very much welcome the bill’s proposed changes to the scope of stamp duty land tax or, as it will become, LBTT. The proposal to move from the slab structure of taxation to a progressive tax structure has been welcomed across the board. That has been welcomed by just about everyone who has given evidence to the committee, because of course a progressive structure has a greater relation to the ability to pay and deals with market distortion. Just now, there is a huge disincentive for builders to build properties that are valued around the margins of the thresholds or for property to be put on the market around the margins, but the new structure will remove that disincentive.

I recognise that there is on-going dialogue or debate about the timing of the announcement of the new bands. We need to be careful, because doing that too late or too early could influence market behaviour. The cabinet secretary is right to be cautious about that.

The bill will also bring modifications to reliefs and exemptions, including the withdrawal of sub-sale relief arrangements. I concede that, when the committee took evidence, views on that proposal were more mixed. However, on balance, the bill has got it right in that regard. Clearly, one of the drivers for the legislation is to reduce tax avoidance, and the various reliefs set out in the old tax regime have allowed tax avoidance to arise. I therefore welcome the proposed changes.

I want to raise two issues in particular, if time allows. The first is relief for zero-carbon homes and similar reliefs, and the second is charities relief. I started the process of assessing the bill by being quite sympathetic to the idea that there should be some form of relief to encourage environmental improvements in homes. Organisations out there gave evidence in support of that. However, we should bear in mind the point that Homes for Scotland made, which is that very few people buy their home with environmental improvement uppermost in their mind. Certainly, when I bought my home, its energy efficiency was not particularly uppermost in my mind.

I take on board the cabinet secretary’s point that there may be other, more appropriate ways of incentivising the use of energy efficiency measures than doing so through the bill. If sensible measures are proposed, the committee will consider them. However, on balance, the bill has it just about right at the moment.

Charities relief will ultimately affect very few transactions in any year. However, it took up some of the time that the committee spent on considering the bill at stage 1. I very much support the element of LBTT that will offer relief for charities. Organisations out there doing charitable work should be supported in that way. In essence, the relief will mean that the Scottish taxpayer will subsidise charities, so we must have the right mechanism for charities to benefit. Brodies solicitors and ICAS suggested that charities relief should be available to organisations whose charitable status is granted by HM Revenue and Customs, but I have some concerns about that, notwithstanding the good relations that I am sure exist between the Scottish Government and HMRC.

HMRC is not answerable to this Parliament on a legislative basis or to the Scottish Government on an executive basis. For that reason, OSCR is a much more appropriate organisation for charities to be registered with in order to benefit from charities relief. Some expressed concern that foreign charities cannot register with OSCR, but we have had clear evidence that section 14 of the Charities and Trustee Investment (Scotland) Act 2005 allows for foreign charities to register with OSCR. Concern was also expressed that registering is an onerous task for charities. However, the requirement to register with OSCR already exists, so it will be no more onerous for a charity to register for charities relief purposes. If a foreign charity wants to get a subsidy from the Scottish taxpayer, the least that it can do is register as a charity.

Let me conclude by focusing briefly on an issue that the convener of the committee mentioned—the block grant adjustment.

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Meeting of the Parliament 25 April 2013

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