PRESSURE was last night growing on ministers to drop plans for a property tax hike on mid value homes as it emerged Scotland's block grant from Westminster was expected to be higher than previously believed.
Campaigners against the Land and Buildings Transaction Tax (LBTT) proposals, which would see homebuyers pay a 10 per cent tax on properties costing between £250,000 to £1m, say the new rates could slow down Scotland's housing market and damage the economy.
However, in a new development, reports yesterday suggested that following talks with Danny Alexander, the Liberal Democrat Treasury Secretary, the Scottish Government was expected to receive £64m more in its 2015/16 'block grant' from Westminster than originally believed.
That extra funding would mean less money would need to be generated from homebuyers in Scotland under the LBTT - the devolved Scottish tax set to replace stamp duty in April.
Mr Swinney is expected to announce new LBTT rates when he unveils his final budget for 2015/16 later this month.
The Scottish Conservatives last month said an alternative 5 per cent tax band on properties between £250,000 and £500,000 would be fairer - and this plan was backed by estate agents.
"If today's reports are correct, then there is now no excuse for inaction from the Scottish Government," Gavin Brown, the party's finance spokesman, said.
"A reduction from 10% tax to 5% would have a positive impact on the housing market and be fairer to families aspiring to own their home. I am calling on the Scottish Government to act quickly, in order to calm nerves in the Scottish housing market."
After the proposals were unveiled in October, following a move by Westminster to devolve stamp duty to Holyrood, estate agents warned they could lead to a shortage of mid value properties.
Michael Luck, managing director of the estate agent Slater Hogg and Howison, said last month that a 5 per cent tax on such homes should ensure such a shortage would be avoided.
"Not only will a 10% tax put people off from moving up the property ladder, but it could stop such properties coming onto the market," he said.
"Like it or not our economy in the UK is fuelled by people buying and selling homes.
"We need people buying and selling houses to generate retail activity and if we don't have that it could have a knock-on effect on the economy."
The Scottish Conservatives's proposals also increase the starting rate of tax to £140,000 - higher than the SNP's plan of £135,000 when a 2% rate would be paid.
According to Registers of Scotland the average price of a detached property in Aberdeen, East Dunbartonshire, East Renfrewshire and Edinburgh is more than £325,000 - meaning buyers in these areas would be hardest hit by the government's new property tax.
Under both the SNP's and Scottish Tories' proposals a 12% tax would be imposed on the sale of properties worth more than £1m.
Currently home buyers pay no stamp duty on properties under £125,000, 2% on those between £125,001 and £250,000, and 5% on those between £250,001 and £925,000.
A Scottish Government spokesman said: "Our current proposals on Land and Buildings Transaction Tax ensure 80% of homebuyers will pay less than they would under the UK Government's plans, or will pay no tax at all.
"Good progress has been made in recent days, but there are still elements of the Block Grant Adjustment that have yet to be agreed.
"Only once there is a final agreement on the Block Grant Adjustment will we be able to consider our proposed rates and bands for residential Land and Buildings Transaction Tax."
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