THE Scottish Greens have claimed house prices will rise in Scotland due to a cut to property tax.
The Scottish Government announced a rise in the lowest threshold of Land and Buildings Transaction Tax (LBTT) last month – rising from £145,000 to £250,000 until March next year.
The tax is paid on house and land purchases – like the stamp duty in other parts of the UK.
The move came the day after the UK Government announced a similar measure in a bid to stimulate the housing market as it makes a recovery from the coronavirus pandemic.
But at a meeting of the Finance and Constitution Committee yesterday, Scottish Greens co-leader Patrick Harvie said the cut rewards those with the means to buy a home and would result in higher bids being entered for properties, thus raising prices more generally.
A paper submitted to the committee by the Scottish Fiscal Commission estimates the tax cut will “lead to a small increase in both prices and transactions in 2020-21, which will generate some additional LBTT revenues”.
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In response, public finance minister Ben Macpherson said: “It was a consideration within a context of distortion among the UK market as a whole which we are a part of in the current constitutional circumstances.
“Providing this fiscal stimulus is designed to have that effect in terms of the multiplier and the wider economy in terms of the wider resource that new house-buyers will have to spend on improving their houses and the wider effect that would have.”
Harvie said he did not accept the minister’s explanation, claiming the policy was designed to be in “lock-step” with the UK Government’s move made soon before.
Ahead of the vote on passing a change to the tax, Harvie said the minister had “been unable to convince” him the tax would make housing more affordable.
He added: “This does seem to me a desire to follow in lock-step with a UK Government whose tax policies should be rejected.
“It’s not a progressive move.”
The change was passed by nine votes to one.
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