The following was first published as a Guest Column in the West Highland Free Press on 3 August 2012.

The subject matter is one of a large number of vital topics that should be addressed by the Scottish Government’s Land Reform Review Group.

Last November, a huge fire engulfed the former Co-op building on Morrison Street in Glasgow. Over 100 firefighters and 16 fire engines fought the blaze. It was the biggest fire in the city for many years and the fire, police and other public sector workers performed valiantly in the face of an extremely dangerous situation.

At the time I remember wondering who owned the building and found out that it was a property developer called Straben Developments Ltd. of Belfast (Title here & here). This company bought the building in September 2007 for £4.2 million but it had lain empty ever since. One of the strange consequences of that abandonment is that, as an empty industrial building, it was exempt from business rates. This means that over the past 5 years, the owners have avoided over £600,000 in local taxes whilst Strathclyde Fire and Rescue are still expected to come and put the fire out despite the fact that last year alone they themselves paid over £2 million in business rates.

I recall this strange tale to highlight the fact that many land and property taxes have long since ceased to have any logical basis. Privately-owned schools for example, receive 80% discounts whilst local authority schools pay the full rate. The single largest item of expenditure of the Scottish Parliament after staff and MSP wages and allowances is the £4 million it pays in business rates to the City of Edinburgh Council.

Across the country land lies derelict and buildings empty. Sometimes there are good reasons for this but too often it is simply because there is no penalty for doing so. This despite growing demand by communities for access to land for housing and community facilities.

Five-a-side football pitches, river-gauging stations, wind farms, lighthouses, ambulance stations and advertising panels on bus shelters are all liable to pay business rates. Public parks, diplomatic missions and cash machines in rural areas, on the other hand are exempt. So too is agricultural land and sporting rights which is why the Duke of Westminster who is one of the richest men in Britain pays nothing on the 95,000 acres he owns in Sutherland (though the estate office and a self-catering unit are assessed). Sheik Mohammed bin Rashid al Maktoum, the rule of Dubai also pays nothing on his 62,000 acre Killilan Estate. So whilst the pub, the filling station and the local hotel all pay their share of local taxes, most landowners pay nothing.

Historically, land was the source of all taxation through feu duties, tithes, hearth taxes and land taxes. Over time, however, the influential landowners of Britain conspired to pass the burden of taxation to labour and business. At the beginning of the 20th century, death duties and estate tax operated very effectively as a means of breaking up large landholdings and diversifying landownership, allowing more people to own farms and smallholdings. Today, such taxes are long gone and even the minimal sporting rates were abolished in 1995.

The Scottish Government is currently consulting on a range of property tax issues including council tax reliefs, Stamp Duty Land Tax and a forthcoming review of business rates and council tax. At the moment these efforts are very much being made in isolation to each other when what in fact we need is to have a proper debate on the principles behind land and property taxes. These should include ensuring that land is put to good use and that abandonment and speculation is penalised and not rewarded. It should also be beyond dispute that of land and property is to be taxed, every owner should pay their fair share.

It is also vital to see such taxes in the context of local democracy. In John Swinney’s budget speech in February, he complained that 90% of Scottish tax revenues are controlled by Westminster. What he didn’t mention is that the situation for local government in Scotland is is even worse and that his Government is responsible. Thanks to the centrally imposed council tax freeze and the fact that business rates are set centrally, local authorities have virtually no financial freedom to raise their own revenues beyond library fines and parking charges (and for all I know these may well be subject to centrally imposed rules as well).

In many European countries, local government not only raises a significant proportion of its own finance through exclusively local taxes but has far greater freedom to set and levy a wide range of other taxes. This means that local communities have the incentive to improve their environment and invest in infrastructure confident in the knowledge that they will see some return in the form of tax receipts.

Tax has always been a hotly contested political issue and national governments will remain responsible for setting the overall framework within which local government operates. But if we want to revitalise our towns and cities, promote civic enterprise and repopulate rural areas, local government must have far greater financial freedom and flexibility.

Last week I was in London travelling on the Jubilee Line extension. This impressive piece of transport infrastructure cost around £3.5 billion to build and was paid for by public money. Once it was completed, land values in the vicinity of each of the new stations rose by a total of around £12 billion. A 30% land tax would have paid for the new railway at no cost to the taxpayer.

All investment by government in new schools, hospitals, roads and ferries raises the value of land. It is appropriate that this be considered as a source of public revenue for local communities. Getting land and property taxes right will, over time stabilise land values and reduce the inflated cost of land. That in turn means more communities can afford to buy it and young people can get hold of the land they need to build homes at an affordable cost.

Such outcomes are possible if the land and property taxes are designed with the public rather than vested interests in mind.


  1. Very interesting and informative at the same time. Thankyou.

    Your last sentence seems to cover the reasons why the joined up thinking will probably never happen.

    Do you think independence would make a difference?

    My cynicism tells me no.


  2. Outstanding article pointing out iniquity and unfairness.

  3. Great blog Andy. Powerful arguments for a fair land tax.

  4. Good solid arguments supporting Land Value Tax @landvaluetax I have tweeted article and also included @RichardJMurphy for his comments

  5. Interesting article Andy but how do we make Local Authorities any more accountable to their public than central government for how they spend the taxes? Local or central government, people don’t get much say.

  6. The houses on Reay Forest and Kilillan pay Council Tax, don’t they? Or are they exempt as well under the sporting/agricultural exemption?

  7. We in the antipodes can spot a good argument when we see one, Andy. Well said. Here’s hoping the Land Reform Review Group’s findings support the logic of your case.

  8. Godfrey Dunkley

    A twenty year and a further ten year study of official records in South Africa, before the ANC Government took over control, showed very encouraging results that can be added to your excellent article.
    Those cities and towns that collected municipal rates from land values only showed twice the percentage economic growth compared to those that collected their revenue from the improved values, over the same period. More than 70% of the cities were on Site Value Rating and only 10% on Total Value Rating. The latter included two major port cities that should have shown greater growth than the rest of the country. Cape Town, the largest, was in the throws of changing to SVR when the new ANC Government, in ignorance, destroyed the best rating system in the world

  9. Kevin McShannon

    It’s good to see the format of a well-reasoned and evidence based letter. For someone who has written a few letters of a more clumsy sort, on revenue for national and local government being sourced from the rental value of all types of land, this is inspiring. Thanks Andy.

  10. Andy, I’ve seen some persuasive arguments for a Land Value Tax based on the most productive potential use of land. What are your views on LVT?

  11. Knew I knew the name – the first work listed hit a spot. I was home on holiday then.

    Tell Lesley I have joined the Board in June – too much work ahead!!

    Look forward to your continued views in West Highland Free Press

    Best wishes

    Mary Schmoller

  12. Very appropriate article Andy. Land value taxation to the required extent to reach the public requirement of land, in both value and availability, is equitable and long overdue.

  13. Pingback: Land & property taxation | Land Matters

  14. Pingback: Scottish land tax & Danish kindergartens | Land Matters