FINANCE Secretary John Swinney should be congratulated for the introduction of the Land and Buildings Transaction Tax (LBTT)("Swinney promises fairer deal with new house purchase tax", The Herald, October 10).

The raising of the house price threshold beyond £135,000 will remove an artificial barrier inherent in the existing system.

There is nothing punitive about the imposition of higher tax on property purchases over £324,000. By comparison with taxes imposed on property transactions in many other countries, LBTT is modest and is based on the ability to pay.

The Scottish Government has to apply much of its budget to mitigate the worst effects of Westminster austerity cuts on our disadvantaged and poorest citizens. I am sure that those amongst us who consider themselves aspirational are prepared to contribute for the care of the needy. That is what society is all about.

May I suggest that the introduction of the tax might also improve the quality and diversity of domestic architecture in Scotland and provide a boost to our excellent architects?

Instead of our suburban areas being blighted by developments of large new houses of almost identical look, shoe-horned into postage stamps of gardens, those who aspire to own larger homes should consider buying a plot and have the house of their dreams designed and built to their own specifications. As I understand it, LBTT will only be levied on the purchase price of the plot and not the completed value of the house.

Graeme McCormick,

Redhouse Cottage,

Arden,

by Loch Lomond.

THE Scottish Government has the same problem in setting the new Land and Building Transactions Tax as it will have in setting any future devolved or partially-devolved taxes. If it had control of the full suite of taxes affecting individuals and business it would be able to carefully adjust and balance the tax regime so that it could increase one tax and reduce another, or reduce one tax to stimulate the economy and receive the increased tax take from other types of tax.

Control over a single tax, or even a few, leaves government in a very difficult position. Being able to set this new form of property duty, or income tax should it be further devolved, really means that changes to a single tax when you don't control the others really has to be done in a way which is revenue-neutral. Taking money out of the economy through tax rises will raise government revenue but is likely to have a negative impact on the economy. Putting money into the economy through tax cuts is likely to have a positive effect on the Scottish economy but will reduce government revenue from that tax without the benefit of receiving the extra tax revenue from other types which may increase through the positive effect on the economy.

As the single measure available to the Government I believe the progressive nature of the rates and bands set in the new land and buildings tax is very cleverly done. Anyone buying a property for less than £325,000 will be in the same position or, sometimes significantly, better off. It is true that in more expensive areas some families with reasonable incomes will have to pay more tax. That is progression. You can't make any meaningful redistributive policies work without those better off people paying more tax.

It is worth looking at the detail of this though. Assuming a buyer has a 10 per cent deposit available and a mortgage which allows borrowing of four times salary that means someone buying a house above £325,000 could have a salary of around £75,000. That is three times the average wage in the UK and also three times the amount required for an average family to survive based on average living costs. My calculations are quite crude, and based on assumptions, but it also means that after tax that family earning £75,000 could be able to afford to save around £25,000 a year if they spend just enough to survive including living in a property which doesn't attract a high tax on purchase. That allows them the opportunity, should they wish, to save for a few years to afford the extra tax they might pay when moving house to larger properties. There will of course be many people affected by this tax when moving home who can't really afford it, but poor people don't live in houses worth more than £325,000, and it is hard to see how tax can be reduced for the poor without others paying more.

If Scots had been brave enough to vote Yes instead of No we would not be staring down the abyss of the Tories' plans to cut benefits for the working poor and cut taxes for the rich and no voting option to avoid at least another decade of austerity. Perhaps then John Swinney would have had less crude methods with which to be progressive and redistribute wealth.

Jonathan Gordon,

64 Brunstane Road,

Edinburgh.

YOUR front-page headline ("Stamp duty revamp 'tax on middle classes'", The Herald, October 10) suggests that the reform of stamp duty could be a "tax on the middle classes". If it is indeed such, all I can say is: about time.

Scotland's middle classes have done well from this Holyrood Government. Freedom from university tuition fees mostly helps their offspring, the council tax freeze is much to their advantage, and they benefit from free prescriptions and eye tests that they could well afford to pay for. Those who are really struggling today are the poor, both those on benefits and the working poor.

It's perfectly reasonable to ask the middle classes to take some more of the strain as Westminster parties line up to show how tough they can be on those for whom a middle-class lifestyle is but a dream.

Doug Maughan,

52 Menteith View,

Dunblane.

THE first tax-raising budget in 307 years could stall the housing recovery, give an unexpected boost to some of the middle classes and turn off investment in new large-scale (energy-efficient) commercial developments.

Estate agents report that homes in the £350,000 - £1 million price bracket have been slow to recover (with many homeowners still with negative equity). Anyone struggling to sell has been dealt an additional blow by this budget, which is a huge disincentive to anyone thinking of moving house in this price bracket.

I believe this tax will be counterproductive, with fewer deciding to relocate .Where are people expected to find the additional cost of relocating ,when salaries have not kept up with inflation?

If selling, the incremental increase in tax will come off the bottom line of the house's value as a minimum, but as purchasers usually can't get a mortgage to cover the stamp duty, it may have a levered impact of reducing house values far more than the actual tax itself.

In commercial property trans­actions this is exactly how the market already works, with investors deducting all their transaction costs (legal and agents' fees and stamp duty) from the gross value to arrive at the price paid. Increasing property tax simply means the additional tax will be deducted from the price paid. Similar to residential property, funding the stamp duty itself is not possible and has to come from cash reserves, so again the levered impact could potentially be far greater, causing values to drop more than the tax itself. With a two-tier transaction cost between Scotland and the rest of the UK, many investors could feel Scotland is becoming a less favourable location, as further increases in property tax become a distinct possibility.

Large commercial properties above £2m are likely to have at least 0.5 per cent swiped off their value, with this having an impact on institutional pension pots. Conversely, those with commercial property worth less than £2m, many in their self-invested personal pensions, have been delivered an unexpected bonus, as the new tax system benefits these properties.

John Swinney lacks consistency. Why have second homes not been targeted? In fact, as these tend to be smaller than the main house, the new tax actually encourages the purchase of a smaller second home or indeed buy-to-let. Where is Mr Swinney's ethos of putting the tax burden on those with the ability to pay in these instances?

I wish Mr Swinney had been a little more imaginative. The final tax raised by the last parliament 307 years ago was a property tax. Three centuries on, is there not a better way of encouraging a fairer society? Why don't we give tax relief to companies who, for example, donate a team of staff to work on community projects as a positive tax policy?

Alison Taylor,

Kirklea,

Gryffe Road,

Kilmacolm.

To destroy the value of decent housing is vindictive Communism at its worst. This will deter business talent from living in Scotland. But who cares?

We can only be grateful that the No vote spared us income tax rates set by this misguided regime.

David Hunter,

Leewood,

Titwood Road,

Glasgow.

I DON'T much fancy paying the new property tax. So if I refuse to pay it, and I remove my name from the voter's roll, will the SNP Government agree to write off my debt in a few years?

John Delaney,

Calder Lodge,

Newton of Barr,

Lochwinnoch.