Scotland's Economy

Land and Buildings Transaction Tax unveiled

January 21, 2015 by John Swinney MSP No Comments | Category Economy

In October, the Draft Budget provided me with the honour of being the first Scottish Finance Minister for 308 years to set national tax rates. Even that experience didn’t prepare me for the even greater honour of seeing the design of my national tax being replicated across the UK in the Chancellor’s Autumn Statement less than two months later.

I have always been clear that I intended for the devolved taxes to be revenue neutral and that the design of the taxes and the associated bands would be influenced by the four maxims set out by Adam Smith, particularly that taxes should be proportionate to the ability to pay. These principles underpinned the tax proposals in the Draft Budget.

One consequence of the Chancellor’s announcement in December is that the amount of revenue I am required to raise to meet that principle of revenue neutrality is lower than anticipated at the time of the draft budget.

In order to remain true to my principle that the first rates and bands of the devolved taxes should be revenue neutral, it is only right that I review the proposed tax rates which I set out last October. In doing so I will remain true to all of the principles that I established in October.

My priority was then, and remains now, to help first-time buyers to enter the housing market and to assist people as they progress through the property market. Consistent with the principle that tax should be proportionate to the ability to pay, the burden of taxation should fall on each according to their ability.

Tax rates should also be designed to support the Scottish market. The average house price in Scotland is £170,000. The average detached house is around £244,000. In contrast the average house price in London is £510,000.

With 50 per cent of transactions lifted out of tax altogether, the measures I am proposing today send a very clear message.

“The priorities set out in the Draft Budget reflected those we established in the Government Economic Strategy but were influenced by the aspirations so tangibly expressed in the Referendum campaign, a desire to live in more prosperous and much fairer country than we do today.

In exercising its first judgments on national taxes, this Government has put fairness, equity and the ability to pay at the heart of what it has done. Where we have power to do so, this Government will do all it can to help people in Scotland enter the housing market, because it is the right thing to do for our economy and our communities.

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