Leader: Property tax out of kilter

Buying a �1m home costs �45,000 more in Scotland than in England because of LBTT
Buying a �1m home costs �45,000 more in Scotland than in England because of LBTT
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Any decent and fair society requires a decent and fair taxation system; if we want first class public services, then we must all bear the cost of their provision. And those who can afford more should pay more. But governments should be careful that their tax plans do not have the effect of damaging the economy.

The Scottish property tax – a charge that sees an extra £45,000 added to the cost of a £1 million house if it is bought in Scotland rather than England – may not bring the benefits that SNP ministers believe. Property experts report that the Land and Buildings Transaction Tax is discouraging highly paid executives from moving to Scotland.

It is tempting to place this issue in the category of “First World Problems”, but if wealthy individuals decide against living in Scotland, the long-term effect will be to deprive public coffers in Edinburgh of a career’s worth of taxes.

The Scottish Government has announced plans to use Holyrood’s tax powers to introduce the top rate of income tax at a level lower than it sits in England and Wales. On top of that, businesses have been hit by substantial increases in rates which have led some employers to warn they’ll have to pass on charges to customers or shut up shop.

Scotland’s economy currently lags behind the rest of the UK and that economic picture is likely to get worse as we move towards departure from the European Union.

This being so, the Scottish Government should be cutting taxes, not raising them. To prosper, Scotland must attract as many high earners as possible and we must be a competitive place for businesses to relocate.

For too long Scottish politicians have treated the private sector as an afterthought, lavishing love and attention on public sector workers. It’s time for a rethink by First Minister Nicola Sturgeon and her colleagues. A smart tax system that truly benefits all will not be created through the introduction of punishing high charges for wealth creators.