Size will matter as Greens plant the seeds of garden tax

Published on Saturday 19 April 2008 19:44

A TAX on big gardens is set to be piloted in Scotland as part of a deal to overhaul local government finance, Scotland on Sunday can reveal.

The Land Value Tax (LVT), under which homeowners are charged on the size and location of the land they own and not just the building, will be considered as part of a deal to replace Council Tax.

Big homes with large gardens in upmarket areas would see their bills soar by up to three times the amount they currently pay. Areas where land values are high, such as Edinburgh, would be hit particularly hard by the new tax.

The levy has been dubbed the garden tax because those homes with large amounts of land would be among the biggest losers. However, the tax would benefit homeowners who wanted to build an extension or a conservatory because property is not liable.

The garden tax is being supported by Holyrood's two Green MSPs and independent MSP Margo MacDonald who currently hold the balance of power in the parliamentary battle over local government tax reform.

The SNP Government and the Lib Dems currently favour scrapping the Council Tax and replacing it with a new local income tax, in the teeth of Tory and Labour opposition.

But the two Greens say that they will only support local income tax if they win some concessions on their own garden tax plan. Patrick Harvie said: "I don't pretend that with two MSPs we have a mandate to impose it but I do hope that an element could be brought in over time."

SNP ministers last week said they would "engage in discussion and dialogue" with the Greens as they seek to scrap Council Tax. They remain committed to ending the tax, having made the pledge their central campaigning message in last year's election campaign.

Meanwhile, a senior Lib Dem source said that they were "entirely relaxed" about introducing some form of garden tax. Various forms of garden tax are used in 700 cities worldwide where local authorities assess the value of land and charge homeowners and businesses accordingly.

Valuers base their calculations on the assumption that the land is put to its "highest and best use". This means that owners of derelict land and homeowners with gardens which could be developed are charged accordingly.

A pilot study in Oxfordshire three years ago found that "the winners are those plots that have little or no garden and the losers are those where houses stand in large grounds and where maximum development is permitted by the planning regime".

Backers of the garden tax say it ensures that all land is used to its "best effect" and acts as a disincentive to speculators who currently buy up land with no intention of using it to build homes or businesses. They also maintain that garden tax ensures that the value of local community amenities such as good schools or transport connections are taken into account, so that people are taxed fairly for the benefit they receive.

But opponents warn that middle-class and well-off families will get stung by the plans. One assessment last year showed that the average bill for a Band H home at 2006-07 rates would rise from 2,258 to 6,582.