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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

McInnes, Alison LD North East Scotland Watch on SPTV

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 devolved by the Scotland Act 2012. I admit to a certain disadvantage, in that most of those who have spoken up to now have been members of the Finance Committee and I have not had that benefit.

Replacing stamp duty land tax is an opportunity for the Scottish Government to make the most of the new powers and to come up with a Scottish system for taxing land transactions that is modern and efficient, that tackles avoidance and that is better aligned with Scots law and practices. We have heard from John Swinney how he believes that that is the case. It is also an opportunity to pursue some of the Government’s policy priorities. The new powers could be used to design a system that incentivises the reuse of empty properties and the development of brownfield sites as well as tackling fuel poverty and climate change. However, I fear that the Government has not been quite as ambitious as it could have been in designing the land and buildings transaction tax.

Members have spoken about the shift from the current slab structure to a more progressive one. That sounds appealing, but I have a concern about the impact of the change on house prices. The proposed new system avoids the sudden increases in liabilities that are a feature of the slab system and create distortions in the market. That sounds attractive, but does anyone lose out from that? The distortions in the market are where house prices cluster below £125,000 and £250,000. The Government’s proposed system will remove the incentive for sellers to price their property below those thresholds, and house prices could increase as a result.

Although I recognise that the feedback from witnesses has been supportive, we must bear in mind the fact that the committee heard evidence only from estate agents and house builders, which are hardly neutral players in the debate. I do not think that we have really heard the views of those who are trying to buy property. Therefore, I press the cabinet secretary to reassure us that he has considered the specific impact of the bill on property prices. There is a nagging worry that, under the Government’s plans, buyers in particular regions of the market may end up paying more for their houses.

The other issue that I will focus on is the lack of measures that will contribute to the Government’s priorities on tackling climate change and poverty. I note what the cabinet secretary said to Ken Macintosh but, like him, I believe that we must use all the levers that we have in our toolbox to change behaviour. The zero-carbon homes relief has not been included in the bill on the basis that it did not achieve its objectives, and I know that the relief attracted very few applications. Nevertheless, there is still a good case for including in the bill a relief that is related to energy efficiency. Two thirds of respondents to the Government’s consultation wanted the tax to support key Government priorities, with energy efficiency being by far the most supported priority. I therefore ask the cabinet secretary to give further consideration to that at stage 2. The witnesses who gave evidence to the committee made it clear that—as other members have said—the energy efficiency of a property is not a top priority for buyers at the moment, but perhaps it ought to be.

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Meeting of the Parliament 25 April 2013

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