Taxing land better could help Scotland’s economic recovery, says the commission. Increasing the role land plays in Scotland’s tax base and a local authority power targeted at newly derelict property are among the recommendations put to government ministers in today’s report on how Scotland’s land could be taxed better.
The Scottish Land Commission was tasked with advising on how changes to existing land and property taxation could support Scotland’s economic recovery and land reform objectives.
While 50% of the UK’s wealth is tied up in land and property, it only forms around 10% of the total tax base. In Scotland, just 12% of all public sector revenue across reserved and devolved taxes are raised through taxes fully or partially levied on land and property.
Identifying changes to the tax system could help regenerate town centres, ensure that the move to net zero is a just transition, deliver wider benefits for local communities, and support a more diverse pattern of land ownership, said the commission.
The recommendations include making information on land ownership, value and use publicly available through the introduction of a cadastral map approach – which is widely adopted across Europe and maps all land data. This would be a vital first step in strengthening the role of land in Scotland’s tax base.
The report also identifies tax as playing a key role in tackling vacant and derelict land and supporting town centre regeneration. It recommends incentivisation for the reuse of sites by introducing additional reliefs on non-domestic rates (NDR) and council tax for new-build properties on longstanding vacant sites. In addition, it says that local authorities should be given new powers to apply NDR to newly derelict properties to discourage them from falling into disrepair.
It also recommends specific consideration of the role of Land and Buildings Transaction Tax, suggesting changes could help support more diverse land ownership and address the risks to a just transition of high land values associated with carbon.
Offering income tax relief to encourage more letting of agricultural land is a final recommendation – which would require engagement on a UK basis to secure changes to what is a reserved power.
Scottish Land Commission chief executive Hamish Trench said: “Land is our most valuable asset and Scotland has scope to tax land in ways that better support the Scottish government’s policy priorities, but this needs to be considered in a careful way that acknowledges the complexity and devolved powers.
“This report sets out steps that can be taken to steadily increase the role that land value plays in taxation, as well as specific reform opportunities to tackle priorities including derelict land regeneration and a just transition.
“Tax is a potentially significant influence in delivering Scotland’s land policy objectives and we recommend an ongoing programme of reforms. Discussing changes to taxation often attracts passionate debate and strong views, our international research has shown how important direct public engagement is in discussion and consideration of the options for changes in land taxation. That is why we also advise that a national conversation needs to happen to help build consensus on the options for taxing land and making the most of Scotland’s land.”