The proposed replacement, Land and Building Transaction Tax has been designed as a progressive tax with buyers paying a proportion of the price above a set threshold. However, the ESPC argued while welcome in principle, the measure would hit families in areas with high house prices.
In a submission to the Scottish Parliament’s Finance Committee it said: “Even whilst acknowledging that one of the aims of a progressive system of taxation is to place a greater burden upon those who have the broadest shoulders, it is worth pointing out that households buying a home tworth £400,000 aren’t necessarily ‘rich’.
“For instance, over the last two years more than 18% of sales of three and four bedroom homes in Edinburgh sold for £400,000 or more.”
In one scenario, purchasers of homes worth between £180,000 and £1.5m would pay 7.5% per pound. Roughly two-fifths would end up paying less, two-fifths would pay the same and a fifth would pay more.
In its submission, the Council of Mortgage Lenders said it had suggested the UK government should also move Stamp Duty to a progressive structure in order to avoid the distortion of house prices created by slab tax tiering.
“While there would be winners and losers out of any new system we believe a progressive system would be more equitable and overcome some of the inefficiencies created by the slab system.
“Clearly the setting of rates to avoid any adverse impact on the residential property market will be important, particularly if the market continues in its current fragile state.
“An issue which might be worth considering is that the lower number of high value transactions in Scotland compared with elsewhere in the UK may result in a greater number of winners than losers from the introduction of a progressive system if its aim was revenue neutrality with what is currently raised from SDLT in Scotland.”
