Stamp Duty replacement must not penalise families
ESPC welcomes plans to replace Stamp Duty in Scotland from April 2015 with the new Land and Buildings Transaction Tax (LBTT).
Giving evidence before the Scottish Parliament's Finance Committee, ESPC Business Analyst David Marshall suggested that LBTT's progressive taxation structure promises to be more attuned with Scottish housing market conditions.
However he also cautioned that the tax must be implemented fairly and equitably across the housing market so that households aren't unfairly penalised when moving up the housing ladder.
Speaking before MSPs, David said that though he agreed with the move away from Stamp Duty, he pointed out that under current proposals, many families looking to move into 3 and 4 bedroom homes for sale in Edinburgh, and other areas with house values higher than the Scottish average, will be expected to pay substantially more in tax than is currently the case.
What David had to say
Speaking following the committee session, David said:
"ESPC fully agree with the general structure of the LBTT and believe the move to a progressive system will correct some of the market distortions brought about by Stamp Duty's 'slab' approach. We expect that the tax applied will be more reflective of the total value of the home being sold, which would bring an end to the inefficiencies brought about by the current approach.
"However, the Scottish Government must take care in determining the proper level at which purchasing higher value homes incurs substantially more tax. Example tax scenarios published by the government indicate that anyone looking to buy a home for £400,000 would pay at least £4,500 more in tax, despite over 18% of sales in Edinburgh of 3 and 4 bedroom homes selling for £400,000 or more. Areas of the country where house prices are higher are not always matched by similarly high income levels, so we would hope that the final proposal takes this into consideration to avoid undue pressure being put on families.
"Though we agree with the principle of the tax to place a greater burden on those wishing to buy higher value properties, it is important to avoid the creation of any undue blockages in the still-recovering housing market. If it becomes too onerous for a household to move up the housing ladder, it has knock-on effects on other areas of the market."