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.

28. November 2011 · Comments Off on Who pays the costs of fighting the fire? · Categories: Democracy, Finance & Money, Fiscal Policy, Governance, Land Values

A dramatic fire has been raging all afternoon at the Gusset building at 120-130 Morrison Street, Glasgow. The property has lain derelict since it was bought for £4,200,000 by Straben Developments Limited of Belfast, Northern Ireland in September 2007. (title documents here plus plan).

Reports claimed that over 100 firefighters were in attendance and at the height of the blaze, there were 16 fire engines in attendance. These public sector workers did the City of Glasgow proud in managing to control the blaze and ensuring the safety of the public. Remember that on 30 November 2011.

But, equally serious is the fact that fire and rescue is a public service that is paid for by the taxpayer and the council tax and business-rate payers of Glasgow.

Straben Developments, however, are exempt from paying business rates on their £4.2 million investment. So, while they sit on their asset which I am sure is fully insured, they pay nothing towards all the services of the City of Glasgow that work to ensure their land and property is protected. Over the four years since 2007, the company has saved over £500,000 in land tax.

It is high time such exemptions were abolished or (better still) a land tax was introduced to prevent such buildings lying derelict in the first place and to make sure the owners pay their fair share towards the costs of those brave firefighters and their equipment which so quickly came to try and put out the fire that broke out this afternoon.


Folk are asking why do they pay no rates? Well, first of all if you want to check for yourself, go to the Scottish Assessor’s portal and type in G5 8BE. The page is here. Valuation is £300,000.

The Scottish Government provide a brief guide to Non-Domestic Rates here. The reason why this property pays no rates is either because it is an empty industrial building and/or that is is Category B listed. (see paragraph under “Empty Property Relief”). All empty factories, warehouses and listed buildings enjoy 100% relief at all times.

NOTE – John Swinney announced in the 2011 spending review that he would be “introducing legislation to reform empty property relief from April 2013 to support regeneration and introduce incentives to reduce empty shops in town centres” Quite what this might mean for industrial and listed properties granted 100% relief is not clear.


I now learn that, while Straban Developments have paid no business rates since 2007, Strathclyde Fire and Rescue paid over £2 million in business rates in 2011/12.


After the fire, the Scottish Assessor amended the rateable value to £0. This is a consequence of the bizarre definition in land valuation law that for a property to have a rateable value there must be some form of non-domestic usage in the form of property – a building, shop, some shooting etc – taking place. Land qua land is not rateable as such. Since Straban Developments acquitted the property in 2007, it has avoided paying a total of £1,085,700 in non-domestic rates as a direct consequence of the bizarre rules as to who should pay taxes on on land and property.

08. April 2011 · Comments Off on Scottish Green Party LVT I · Categories: Finance & Money, Fiscal Policy, Land Reform, Land Values, Politics

UPDATE 9 April 2011

Actually, the error I identify below (over-estimate of LVT revenue by £123 million) doesn’t look like an error on further examination. The land values in my original report were from January 2009 (the Valuation Office) and thus that is why the NDR figures are from 2009 also. Land values will have risen since then, probably by a little more than the Council Tax revenue has done (which means if there is a discrepancy it’s probably in the opposite direction – i.e. that LVT would raise a little more extra revenue than the 2009 calculations), but we cannot forecast use figures using different base years. Obviously the precise difference between the two will vary ahead of LVT being introduced, as one taxes properties and the other taxes land. The figures published in the SGP proposals are thus robust.


Today, the Scottish Green Party (SGP) published its proposals for a Land Value Tax to raise finance in the next Scottish Parliament. A thoughtful commentater (Steve @3pSteve on twitter) has questioned the figures used. His criticisms are published here. Specifically, he argues that the £1,039 million that the SGP claims will be raised is incorrect and should instead be a mere £150 million. He levels two particular allegations.

The first is that the SGP has underestimated current local tax revenues from Council Tax and Non-domestic Rates (NDR) by £274 million. This is because the SGP proposals do not include income from Council Tax Benefit (CTB) and that the wrong figure has been used for current NDR.

He is correct that the CTB is not included in the figures for current income. This is a benefit paid by the UK government and will continue to be paid under LVT. So, one either excludes it from the current income and future LVT or one includes it. The SGP proposals exclude it (if they were to include it then forecast LVT income would rise to £5,027 million)

On the question of NDR, the figure Steve cites is a mid-year estimate for 2010-11. The SGP paper uses a figure of £1.9 billion which is from 2008-09. The figure for 2009-10 figure is £2,015 million.

So, at most, the SGP proposals over-estimate current income by £115 million.

The second criticism is that the LVT revenue estimates are over-stated by £615 million. This is based on the assertion that the second table in the SGP proposals has current CT at £2,568 million and that this is £659 million more than is actually raised by CT (£1,909 million).

However (and this is made clear in the footnote to the table), the £2,568 million excludes CT discounts such as empty property relief and single person discounts. In other words, this is the TOTAL sum that would be raised by CT were it to be applied in full to all properties. It is wrong therefore to make the assumption that this is a flawed methodology which, if applied to the forecast LVT yield would reduce it by £615 million as Steve claims. The forecast thus remains at £4,839 million.

The conclusion of all of this is that the SGP proposals may overestimate revenue by £123 million (£4,839 million minus £3,923 million current revenue). This should be seen against the background of, imperfect valuation data but also substantial flexibility in the exact level at which to set the rate of LVT. Thus it appears perfectly reasonable to plan for a £ 1,039 million extra revenue.