Too early to judge impact of LBTT, Holyrood report concludes
Scotland’s transition from stamp duty land tax to the land and buildings transaction tax (LBTT) was "operationally successful", but it is too early for definitive conclusions on the impact of the tax, according to a new report by the Scottish Parliament’s Finance & Constitution Committee.
The MSPs say there is "a lack of consistency in forecast and outturn data" on the tax, and they cannot draw any definitive conclusions on the impact of LBTT rates and bands after only one year of its operation.
They note that a majority who contributed to the parliamentary inquiry agreed that the rates had been of benefit to the first time buyer housing market, but they recommend that the Scottish Government look in particular at the market in more expensive properties, where the rates are higher.
More infiormation should also be provided, they state, on transaction levels – for both residential and commercial properties – and an update on the Government's "informed view" on grace periods to prevent those who are both selling and buying from having to pay the "second home" additional rate.
And ministers are asked to respond to the Law Society of Scotland's view that there may be a case for Revenue Scotland having a greater role in the development of tax policy.
Committee convener Bruce Crawford MSP commented: “It’s reasonable to say year one of the LBTT went smoothly and was operationally successful. That said, a key challenge for us has been the lack of consistency in the presentation of data relating to LBTT. That made it difficult to compare forecast and outturn data and to fully assess the tax’s impact on the property market in Scotland.
“There are also challenges in identifying ‘causality’ for the changes seen in the housing market – in short, it’s difficult, based on the data, to separate out the impact of LBTT rates and bands from extraneous factors, such as the general economic situation.
“Our committee therefore recommends that the Scottish Government’s review of the first year of LBTT includes an analysis of the behavioural response to LBTT, particularly in relation to homes costing between £325,000 and £750,000. This should include an assessment of the likelihood of an ongoing response and an analysis of the impact of extraneous factors.”