SNP’s £750m Budget blow
THE SNP Government is facing a £750 million black hole over the current parliament after massively overestimating how much tax it would receive from house sales.
Figures contained in Thursday’s Budget documents show ministers have almost halved their forecasts for income from Land and Buildings Transaction Tax (LBTT).
Last year, the Scottish Government estimated LBTT, the devolved replacement for stamp duty, would raise almost £1.8 billion between 2017-18 and 2020-21 from residential sales.
This has now been revised down by £833m to £962m, a drop of 46 per cent.
Income from non-residential property sales has also been revised down by £29m, although income from a supplement on second home sales is predicted to rise by £110m.
The net change is a £752m drop in
anticipated revenue. The Tories blamed excessive LBTT rates for depressing sales.
There is no LBTT charge for the first £145,000 of a house purchase, but it is levied at two per cent between £145,000 and £250,000, then five per cent between £250,000 and £325,000, then 10 per cent between £325,000 and £750,000, and at 12 per cent above £750,000.
In its independent report on the 2017-18 Draft Budget, the Scottish Fiscal Commission, the watchdog that scrutinises the forecasts, confirmed the drop.
It said a key factor was lower than expected sales in the £325,000-£750,000 bracket, which generates 60 per cent of all residential LBTT. The Commission said the slump in sales in and around Aberdeen appeared to account for “a significant portion” of the projected £74m in shortfall for the current financial year.
Tory MSP Dean Lockhart said: “House buyers and taxpayers are losing out as a result of the SNP’s flawed LBTT plans.”
A Government spokeswoman said: “This government’s Land and Building Transaction Tax will ensure that in excess of 90 per cent of people buying a property between £125,000 and £145,000 pay no tax or less tax than under the previous Stamp Duty Tax, and will take up to an estimated further 10,000 house purchases out of tax next year alone.”