IN October, John Swinney proudly unveiled details of the first national taxes to be raised in Scotland for 300 years. Between them, the Land and Buildings Transaction Tax (LBTT) and the Scottish Landfill Tax would bring in £558million, according to the Scottish Government's best estimates. Not a king's ransom - less than two per cent of Holyrood spending - but a little bit of history and, with much more significant income tax powers on the way, a foretaste of Scotland's fiscal future.

Not surprisingly, interest centred on LBTT, the tax that will replace Stamp Duty in Scotland from April 1. The Finance Secretary's plans were cleverly designed, with marginal rates replacing clumsy 'slabs' that distorted the market, and a good deal fairer than Stamp Duty as the old-established property purchase tax was configured at the time. Reaction was positive. Making it easier to purchase homes at the cheaper end of the market was widely welcomed as helping first time buyers while hammering those buying £1million mansions (that'll be £77,300, please) was seen, in most quarters, as fair enough.

It all changed in December when George Osborne used his Autumn Statement to announce sweeping reforms to Stamp Duty. The Chancellor copied Mr Swinney's sophisticated structure but offered far more generous rates for those buying mid-market properties. As things stood last month, Scots buying a £350,000 home - the sort of place sought after by middle class families in Glasgow, Edinburgh or Aberdeen - would face an LBTT bill of £12,300 from April, while in England the Stamp Duty would be £7500. The Conservatives and much of the property industry were suddenly up in arms.

Mr Osborne's trick was simple. Whereas Mr Swinney's LBTT was set up to raise the same amount of money as the old Stamp Duty (albeit in a more progressive fashion), the Chancellor's reforms amounted to a whopping £800million tax cut. This was taken into account when, earlier this month, the UK Government decided to dock Scotland's block grant not by £558million - the amount the taxes to be devolved used to raise - but £494million. The decision left Mr Swinney with a dilemma. The £64million question was this: should he stick to his guns or bow to pressure and pass on Mr Osborne's tax cuts to Scots home buyers. On Wednesday, we learned the answer. A tax cut it was. The Finance Secretary put £60million back in the pockets of Scotland's home buyers. That £12,300 bill came down to £8350 as he sought to ease the burden on mid-market buyers (though the tax on buying a £1million home actually went up a bit more).

Why did he do it? Passing on a Tory tax cut, especially one that benefits middle class home buyers, hardly squares with the SNP's rhetoric around social justice and tackling inequality. Mr Swinney invoked the serious-sounding "principle of fiscal neutrality". He even mentioned it in the same breath as Adam Smith, though the founder of modern economics would be as baffled as anyone else by the concept.

Fiscal neutrality simply means LBTT will raise the same amount of money as the Stamp Duty it replaces. Why Mr Swinney should elevate this to a "principle" is not clear. None of the reasons suggested by his aides - this was the first tax to be devolved; there were complications around adjusting the block grant - are altogether convincing. In fact, the "principle" looks more like a device to give the impression he had little choice but to pass on Mr Osborne's tax cut. Especially now Mr Swinney says it might not apply to other devolved taxes. If so, it might conceal the blushes of those on the left of the SNP who could be feeling somewhat dismayed about the Finance Secretary's decision.

At least they will not have Scottish Labour adding to their embarrassment. Mr Swinney guessed right that Labour would not go after him, as new leader Jim Murphy has no time for the old "I'm more left wing than you are" game that has so enlivened relations between Scotland's main social democrat parties. All of which leaves the Scottish Conservatives celebrating a victory but also mourning the loss of one of their strongest General Election messages: we're on your side, we're against that sky-high new version of stamp duty. Might that have something to do with Mr Swinney's real reasons for passing on the tax cut?

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