Scottish Land Tax a step closer

The Scotland Bill, which has its second reading today, contains a powerful increase in freedom for Scotland to introduce entirely new taxes.

Although much of the debate has centred on the "Scottish [income tax] rate resolution", merely devolving greater control over personal tax rates, two potentially far more significant clauses appear just below this. These allow for an Order in Council (secondary legislation, not requiring debate at Westminster) to "specify, as an additional devolved tax, a tax of any description" (our emphasis) and associated "modifications of any enactment, or any other instrument"; and for the "disapplication" (i.e. abolition, in Scotland) of Stamp Duty Land Tax (SDLT).

SDLT is a tax on transactions, not on land values. Although the Bill also enables a Scottish "tax on interests involving land" (i.e. a Scottish SDLT), there is no requirement placed upon Scotland to levy such a tax. Therefore in Scotland, if the Scottish Government wishes to introduce a tax based on the annual rental value of land (Land Value Tax or LVT), unless this Bill is amended it would not require approval of Parliament in London in order to do so.

Scotland's own Parliament faces an election in May. The current minority Scottish Nationalist Government has already shown initiative in piloting Tax Increment Financing (TIF) - perhaps just because it can, i.e. to flex its financial muscles. All but 18 of the 129 MSPs belong to parties with either explicit support for LVT or a strong and growing level of support for it in Scotland. The Greens and Lib Dems are committed, as are several SNP and Labour/Co-op Party MSPs in Scotland.

Although the Scotland Bill may not recieve Royal Assent before the May elections, it provides every reason for supporters of LVT to campaign hard for these newly devolved powers to be exercised thereafter. Unlike the rest of Britain, Scotland has a complete Register of land ownership and does not depend on Whitehall-based officials to conduct land valuations. Given the will of those assuming power in May, LVT could be contributing to Scottish coffers and a resurgent Scottish economy well before the next UK General Election in 2015.

Land reform was one of the first areas for policy action by the devolved Scottish Assembly (as it then was called) in 1998, which helped re-educate Scottish people as to the benefits of LVT, even though it was outwith their legislators' powers until now. Lawyers and valuers based in Scotland among PLRG members should get busy!