Shortfall in LBTT
Pressure on Mackay as property tax figures fall
Finance Minister Derek Mackay will be forced to bride a growing gap in the sums raised from the government’s property tax when he delivers his first Budget next month.
New figures have confirmed that the land and buildings transaction tax will not hit the forecasts of his predecessor John Swinney.
LBTT replaced stamp duty after the tax on property sales was devolved in April 2015 and is the biggest national tax managed by the Scottish Government.
Mr Swinney, despite earlier denials, was subsequently forced to admit that it has raised less than expected in its first year.
Now, as part of the data released with the Autumn Statement, the UK Office for Budget Responsibility has warned of a widening gap between the Scottish Government’s forecasts and the sum collected.
The Fiscal Commission, which will become Scotland’s official forecaster, called for improvements to the modelling used in LBTT forecasts, but it still signed off the Scottish Government’s estimates as “reasonable”.
An additional three per cent levy on sales of second homes was introduced this year in line with additional tax imposed south of the border on stamp duty.
It is almost certain that Mr Mackay will have to readjust the figures in his Budget on 15 December.
Faisal Choudhry, director of Scottish research at estate agents Savills told a Sunday paper that the Scottish taxation structure “doesn’t make us competitive with the rest of the UK”.
He said the government didn’t do a behavioural analysis or any modelling prior to launching the LBTT.
The Scottish Government says the collapse in the north east property market following the oil price slump had been a factor in the shortfall.
But the Scottish Conservatives’ shadow finance secretary, Murdo Fraser called for the LBTT rates to be overhauled.