After boycotting the Calman Commission and extending a distinctly half-hearted welcome to its progeny, the new Scotland Act, the SNP Government has wasted little time in taking up an important new power the legislation has devolved to Holyrood.
There is to be a major revamp of Stamp Duty, or Land and Buildings Transaction Tax, to give it its new moniker. And there is to be a new body to collect it, Revenue Scotland.
Both moves are welcome. This Government has spent too long agitating about the taxes over which it has no control, such as Corporation Tax, while perhaps paying limited attention to those it has the power to alter.
Economic confidence in the whole of the UK is disproportionately dependent on confidence in the housing market because so many of us have so much of our wealth tied up in bricks and mortar, compared with our Continental neighbours. And it is an area of life where adjusting the levers of Government policy can make a considerable difference to market conditions. The UK two-year holiday on Stamp Duty on properties between £125,000 and £250,000 is a case in point. Market activity among first-time buyers showed a marked upturn, especially in the run-up to the end of March, when it ended.
Devolution can only mature as a process if Scotland begins to take responsibility for collecting the revenue it spends, so the establishment of a Scottish tax collection agency is a logical step. Presumably, it is envisaged that its scope will extend to gathering other taxes in the event of Scottish independence or further devolution, even if the Finance Secretary's claims of major costs savings might err on the side of the heroic. The plain facts of the matter are that taxes on land and property are popular with the Treasury because they are relatively easy to collect and hard to evade.
There is also a general consensus that it is fair to spread taxes between income and property, when a significant minority has significant wealth concentrated in the latter.
Reforming Stamp Duty is more complex that first appears. John Swinney has expressed a desire to make it "more progressive". As those with less wealth purchase cheaper properties and the rate at which the tax is paid rises in bands, it can be argued that it is already a progressive tax. The big problem with its current structure is that the banding creates a "slab" effect, with property prices bunched just beneath each threshold.
This could be eliminated by asking buyers to pay higher rates only on the portion of the purchase price that falls above each threshold (as with income tax). However, it is difficult to create such a system and make it revenue neutral because increasing the tax on the most expensive properties will not contribute enough. If rates were adjusted to ensure a graduated tax raised as much as at present, most would end up paying roughly the same.
Nevertheless, raising the threshold for Stamp Duty to £180,000, as has been mooted, would clearly help first-time buyers, which is where most help is needed, if the fall in the proportion of Scottish homeowners is to be stemmed. Adjusting the tax could also be used to bring empty property back into the market, encourage energy efficiency and incentivise housebuilding on brownfield sites.
We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.
Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.