IN their First Minister's Questions clashes, Johann Lamont occasionally accused Alex Salmond of conjuring up a squirrel. Television viewers tuning in for Countdown, who caught this accidentally, were no doubt bamboozled. At Holyrood, a squirrel is a diversionary tactic. The derivation is lost in the mists of time. Legend has it that Henry McLeish's spin doctor, struggling to explain the muddle over the then-FM's office rents during a press briefing, gazed out of the window and declared: "Oh look! A squirrel!" The story is disputed but, for whatever reason, a squirrel is a squirrel.
There was a whiff of the squirrel about Chancellor George Osborne's reform of Stamp Duty this week. His Autumn Statement brought sobering economic news. Net borrowing is on course to hit £90billion this year, higher than predicted at the time of the Budget in April, and Mr Osborne now has no chance of keeping his promise to eliminate the deficit by the next election in May. The IFS think tank swiftly pointed out that 60 per cent of the total spending reduction planned between 2010 and 2020 has yet to be identified.
None of this grim detail prevented the Stamp Duty changes from becoming the most talked about aspect of the Autumn Statement. Overall, the reforms amounted to an £800million tax cut. Fully 98 per cent of home buyers - everyone, in fact, parting with less than £937,000 - will be better or no worse off as a result.
In Scotland, discussion has inevitably focused on the differences between the new system and the one that will replace it from April 1, John Swinney's Land and Buildings Transaction Tax. Stamp duty was devolved under the 2012 Scotland Act and LBTT is the result. The comparisons have not all been favourable. Both systems replace Stamp Duty's old "slab" bands with marginal rates, similar to income tax. However, where Mr Osborne introduced a five per cent rate payable between £250,001 and £925,000, Mr Swinney is charging 10 per cent between £250,001 and £1million. The effect will be to make buying properties in the mid- and upper price brackets considerably more expensive in Scotland. Someone purchasing a £400,000 home, for example, will attract Stamp Duty of £12,000 until April. When LBTT starts, they'll have to shell out £17,300.
Property industry bodies have called for a review of the LBTT thresholds. The Scots Tories have vowed to campaign for changes, arguing the middle classes are being unfairly hammered. Expect it to be their number one issue in the general election.
They have little chance of getting their way, however, as the other parties are satisfied Mr Swinney has come up with a fair, progressive system specifically tailored to the Scottish housing market. And that is very different from England's, at least if you include London.
The average house price north of the Border is about £170,000 compared with £270,000 down south. Here, very few properties change hands for £1million or more. Last year there were just 123 out of 87,475 transactions in total. Down south 1363 £1million-plus homes were sold in August alone, according to the latest official figures from the Land Registry. Indeed there are that not all that many homes in Scotland that sell for over £500,000. According to the Scottish Government, 97 per cent of all property sales are below the half-million mark. Mr Swinney would simply not be able to balance the books if he used LBTT as a mansion tax.
The Conservatives have complained that anyone paying over £254,000 will be worse off after April. The Scottish Government does not dispute the figure but says only one in five property sales falls into that category. In other words 80 per cent of buyers will be better off after April even compared with Mr Osborne's more generous new scheme.
As Mr Swinney said when he announced the rates, LBTT will be first tax raised by a Scottish parliament for 300 years. We now know it will not be the last. Looking at the detail, no-one should be surprised if in a few years' time income tax in Scotland diverges significantly from the rest of the UK to reflect different earnings profiles north and south of the Border.
ends
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article