Chamber
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
I rise as a former member of the Finance Committee. Although I was not part of the stage 1 deliberations on the Land and Buildings Transaction Tax (Scotland) Bill, I was part of the committee when evidence was being taken regarding the transfer of powers under the Scotland Bill—now the Scotland Act 2012. I will touch on that later in my speech.
There are three key areas that I wish to consider. The first involves the progressive nature of the land and buildings transaction tax as introduced by the Scottish Government. The second is about the administration of taxation in Scotland, specifically in relation to LBTT. Thirdly, there is the principle of greater control.
I start with the progressive nature of the tax. The idea that the burden of payment should reflect the ability of the payer to bear it is the principle that has guided the bill. We can consider some of the supportive comments that have been made in that regard. Isobel d’Inverno, convener of the Law Society of Scotland’s tax law committee said:
“We strongly support the replacement of the slab system of stamp duty land tax, which many perceive as unfair due to the steep rise in tax for properties just above the thresholds. This distorts the market by keeping prices artificially low and gives rise to tax avoidance. We are certain that the proposed new progressive structure will be fairer and simpler for those buying a house.”
The Edinburgh Solicitors Property Centre was quoted in the Evening Times as saying that the current structure of slab duty
“creates inequalities in the level of taxation paid.”
I note that, in its submission to the Finance Committee, the Council of Mortgage Lenders Scotland said:
“While there would be winners and losers out of any new system we believe a progressive system would be more equitable and overcome some of the inefficiencies created by the slab system.”
I think that that will be an important measure. I say that especially as a member who represents North East Scotland, where property prices are high. That means not only that property is expensive and towards the upper end of the scale to which the duty would apply, but that properties that are further down the property ladder also have inflated prices. At the moment, stamp duty is exempted for houses that sell for less than £125,000, but it is difficult to find a decent-sized family property in Aberdeen and other parts of the north-east that would come under that threshold. By raising the threshold under which duty will not apply, the Scottish Government will benefit constituents of mine, many of whom—either young families or first-time buyers—are looking to make that step onto the property ladder. I therefore welcome the move and disagree with those who have said that first-time buyers are not necessarily looking to buy those kinds of properties. In some parts of Scotland, those kinds of properties are the only ones that are available. Therefore, the introduction of the new levels as part of LBTT is welcome.
I welcome the establishment of revenue Scotland. In particular, I welcome the fact that it will be able to deliver greater efficiency in the administration of tax; the administration costs will be around 25 per cent lower than those of HMRC. That will be of benefit not only to the Scottish Government, but to the taxpayer, because it will avoid some of the inefficiencies that might otherwise have existed in the system.
When the Finance Committee took evidence from HMRC on the introduction of new tax powers, I asked whether, in theory, it could refuse to administer the new taxes on behalf of the Scottish Government, were the Scottish Government to take a radically different approach to that which exists in the rest of the UK. I was told that, in theory, it could. That might have meant that the Scottish Government could have found itself unnecessarily hamstrung had it chosen not to establish revenue Scotland and instead to rely on HMRC, because it might have been unable to create a different kind of system along the lines of LBTT. The establishment of revenue Scotland will allow the Scottish Government that flexibility and the ability to do something different.
The creation of revenue Scotland also demonstrates that the Government and this Parliament are capable of handling the burden of greater power and responsibility being handed to us.
That said, we must accept that, even with the new taxes being transferred to Scotland, 85 per cent of the tax that is paid in Scotland will remain reserved and the Scottish Parliament will have control of and responsibility for only 58 per cent of the revenue that is spent in Scotland. The Government and I want that to shift more towards Scotland having greater control of the revenue of Scotland and having all the revenue and taxation powers of Scotland at its disposal.
If LBTT does nothing else, it serves as a microcosm that shows that this Parliament and this Government can do something radically different from the status quo. We can do something more innovative and progressive on taxation when the powers exist in this Parliament to do so.
I look forward to the day when LBTT comes into force, but I also look forward to the day when this Parliament takes control of the other taxation and revenue-raising powers that would exist with independence, because I believe that what we are doing today demonstrates that a different approach is not only possible but optimal.
15:44
There are three key areas that I wish to consider. The first involves the progressive nature of the land and buildings transaction tax as introduced by the Scottish Government. The second is about the administration of taxation in Scotland, specifically in relation to LBTT. Thirdly, there is the principle of greater control.
I start with the progressive nature of the tax. The idea that the burden of payment should reflect the ability of the payer to bear it is the principle that has guided the bill. We can consider some of the supportive comments that have been made in that regard. Isobel d’Inverno, convener of the Law Society of Scotland’s tax law committee said:
“We strongly support the replacement of the slab system of stamp duty land tax, which many perceive as unfair due to the steep rise in tax for properties just above the thresholds. This distorts the market by keeping prices artificially low and gives rise to tax avoidance. We are certain that the proposed new progressive structure will be fairer and simpler for those buying a house.”
The Edinburgh Solicitors Property Centre was quoted in the Evening Times as saying that the current structure of slab duty
“creates inequalities in the level of taxation paid.”
I note that, in its submission to the Finance Committee, the Council of Mortgage Lenders Scotland said:
“While there would be winners and losers out of any new system we believe a progressive system would be more equitable and overcome some of the inefficiencies created by the slab system.”
I think that that will be an important measure. I say that especially as a member who represents North East Scotland, where property prices are high. That means not only that property is expensive and towards the upper end of the scale to which the duty would apply, but that properties that are further down the property ladder also have inflated prices. At the moment, stamp duty is exempted for houses that sell for less than £125,000, but it is difficult to find a decent-sized family property in Aberdeen and other parts of the north-east that would come under that threshold. By raising the threshold under which duty will not apply, the Scottish Government will benefit constituents of mine, many of whom—either young families or first-time buyers—are looking to make that step onto the property ladder. I therefore welcome the move and disagree with those who have said that first-time buyers are not necessarily looking to buy those kinds of properties. In some parts of Scotland, those kinds of properties are the only ones that are available. Therefore, the introduction of the new levels as part of LBTT is welcome.
I welcome the establishment of revenue Scotland. In particular, I welcome the fact that it will be able to deliver greater efficiency in the administration of tax; the administration costs will be around 25 per cent lower than those of HMRC. That will be of benefit not only to the Scottish Government, but to the taxpayer, because it will avoid some of the inefficiencies that might otherwise have existed in the system.
When the Finance Committee took evidence from HMRC on the introduction of new tax powers, I asked whether, in theory, it could refuse to administer the new taxes on behalf of the Scottish Government, were the Scottish Government to take a radically different approach to that which exists in the rest of the UK. I was told that, in theory, it could. That might have meant that the Scottish Government could have found itself unnecessarily hamstrung had it chosen not to establish revenue Scotland and instead to rely on HMRC, because it might have been unable to create a different kind of system along the lines of LBTT. The establishment of revenue Scotland will allow the Scottish Government that flexibility and the ability to do something different.
The creation of revenue Scotland also demonstrates that the Government and this Parliament are capable of handling the burden of greater power and responsibility being handed to us.
That said, we must accept that, even with the new taxes being transferred to Scotland, 85 per cent of the tax that is paid in Scotland will remain reserved and the Scottish Parliament will have control of and responsibility for only 58 per cent of the revenue that is spent in Scotland. The Government and I want that to shift more towards Scotland having greater control of the revenue of Scotland and having all the revenue and taxation powers of Scotland at its disposal.
If LBTT does nothing else, it serves as a microcosm that shows that this Parliament and this Government can do something radically different from the status quo. We can do something more innovative and progressive on taxation when the powers exist in this Parliament to do so.
I look forward to the day when LBTT comes into force, but I also look forward to the day when this Parliament takes control of the other taxation and revenue-raising powers that would exist with independence, because I believe that what we are doing today demonstrates that a different approach is not only possible but optimal.
15:44
In the same item of business
The Deputy Presiding Officer (John Scott)
Con
Good afternoon. The first item of business this afternoon is a stage 1 debate on motion S4M-06294, in the name of John Swinney, on the Land and Buildings Tra...
The Cabinet Secretary for Finance, Employment and Sustainable Growth (John Swinney)
SNP
The Scotland Act 2012 devolves responsibility for taxes on land and property transactions and disposal to landfill to the Scottish Parliament from April 2015...
Mary Scanlon (Highlands and Islands) (Con)
Con
I am a member of the Public Audit Committee, which has been looking into the Auditor General for Scotland’s report on Registers of Scotland’s IT system. Para...
John Swinney
SNP
I would describe the position as work in progress. As I set out to Parliament last June, Registers of Scotland will be the collection organisation for the ne...
Kenneth Gibson (Cunninghame North) (SNP)
SNP
I am pleased to highlight key areas that the Finance Committee considered following its stage 1 evidence taking.The Scotland Act 2012 devolves a range of tax...
Ken Macintosh (Eastwood) (Lab)
Lab
The land and buildings transaction tax is, I believe, Scotland’s first new tax in 300 years. It stems from the conclusions of the Calman commission, establis...
John Mason (Glasgow Shettleston) (SNP)
SNP
Will the member take an intervention?
Ken Macintosh
Lab
I hope that Mr Mason can demonstrate a sense of humour.
John Mason
SNP
Does the member accept that, if the overall indication is that the effect will be broadly neutral, the room for manoeuvre is not huge? The position is not th...
Ken Macintosh
Lab
Indeed. I was just about to suggest to the cabinet secretary that, if he indicates to the committee and to Parliament when he has agreed on a date, so that w...
John Swinney
SNP
The point that I advanced at the committee is that I was not persuaded by a relief for a property transaction whereby the purchaser got the benefit of an inv...
Ken Macintosh
Lab
I welcome the cabinet secretary’s approach. I have sympathy for the non-renewal of a scheme for which there were no successful applications in Scotland.Howev...
Mike MacKenzie (Highlands and Islands) (SNP)
SNP
Does the member accept that, given the progressive nature of the tax, the proposed measure would help those who are further up the ladder more? Those are the...
Ken Macintosh
Lab
Mr MacKenzie raises an interesting point about our desire as a country to reduce carbon emissions. If carbon emissions on larger homes are greater, we need t...
Gavin Brown (Lothian) (Con)
Con
The Scottish Conservatives support the general principles of the bill and we will vote for it at decision time. Much of the bill and much of what the cabinet...
John Swinney
SNP
I confirm that there will be an indication of the licences that are included in the scope. The bill will specify which licences will be covered rather than s...
Gavin Brown
Con
That is helpful, and it is probably the right way to go about it, so I am even more encouraged on licences than I was to begin with.Before I get too carried ...
The Deputy Presiding Officer
Con
We now move to the open debate. I call Jamie Hepburn, to be followed by Malcolm Chisholm. We are a bit tight for time, so I give Mr Hepburn up to six minutes...
Jamie Hepburn (Cumbernauld and Kilsyth) (SNP)
SNP
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 scru...
The Deputy Presiding Officer
Con
You have 30 seconds.
Jamie Hepburn
SNP
The block grant will be reduced on a one-off basis for LBTT. We have to get that right. I say to Mr Macintosh that how fairly the Treasury plays on the matte...
Malcolm Chisholm (Edinburgh Northern and Leith) (Lab)
Lab
I am pleased to take part in this landmark debate, in which we are considering a tax bill for the first time in the history of the Scottish Parliament. I hop...
Stewart Stevenson (Banffshire and Buchan Coast) (SNP)
SNP
Although it closes a loophole, on 21 March 2012, the Chancellor of the Exchequer announced that, with immediate effect, there would be a 15 per cent stamp du...
Malcolm Chisholm
Lab
That is a fair point and I would not disagree.Ensuring that there is no tax avoidance is an important aspect of the bill. The general provision, which will b...
John Mason (Glasgow Shettleston) (SNP)
SNP
It is encouraging that there is widespread welcome for the replacement of SDLT with a simpler and more progressive tax, and especially for the replacement of...
Neil Findlay (Lothian) (Lab)
Lab
Given that John Mason has expressed his excitement about today, will he express some contrition about opposing the Calman commission and the Scotland Act 201...
John Mason
SNP
That question is not quite on subject. Given that Calman proposed a system of block grant reduction that would have damaged Scotland, I have to say that I am...
Michael McMahon (Uddingston and Bellshill) (Lab)
Lab
This is not the first time I have taken part in a stage 1 debate in which there has been very little to say that has not been said already by the time I have...
Mark McDonald (North East Scotland) (SNP)
SNP
I rise as a former member of the Finance Committee. Although I was not part of the stage 1 deliberations on the Land and Buildings Transaction Tax (Scotland)...
Alison McInnes (North East Scotland) (LD)
LD
I, too, welcome today’s stage 1 debate on the first of a series of bills that are being introduced as a result of a number of tax-raising powers being devolv...