Land value taxation in Scotland

A new report written for the Scottish Land Commission by a research team at the University of Reading suggests that land value taxation could raise revenue in a more “progressive” way. The report identifies a number of practical issues that would need to be resolved before any land value tax system is implemented. These include the role of the planning system and the land register, and coordination with existing land and property taxes so that any new tax would not negatively affect development viability and wider public policy goals.

Alongside the report, the Land Commission has also published a briefing paper detailing the next steps for its work on land value tax and how it could help improve the “productivity, diversity and accountability” of the way Scotland’s land is owned and used. This work will examine the potential role land value tax may play in:

  • Reducing the amount of vacant and derelict land: land value tax could help to achieve this on some sites by establishing a financial cost for keeping land idle, creating an incentive for it being brought back into use and discouraging speculation in the land market.
  • Capturing more of the publicly-created increases in land value as a result of wider societal changes: for example, improvements in the local or national economy can make an area more desirable to live in increasing land value; land value tax has the potential to return some of these gains to society by using the revenue raised to help fund local infrastructure, amenities, and public services.
  • Creating more diverse land ownership in Scotland: changes in the land tax base and/or tax structure could support the move to a more productive and diverse pattern of rural land ownership and use.