In response to a new report prepared for the Scottish Land Commission on land and property taxation in Scotland, Sarah-Jane Laing, chief executive of Scottish Land and Estates (SLE), said:

“We’ll need to reflect on the detail of the report but we continue to urge the Scottish Land Commission to consider taxation in the round, with full understanding of the potential economic impact and any unintended consequences.

The removal of Agricultural Property Relief would have the potential to enact the break-up of family farms across Scotland which would be a hammer blow to the rural economy.

“As the report notes, the revenue that could be raised by removal of Agricultural Property Relief is relatively small as a proportion of UK tax take so there appears to be little merit in the proposal from a fiscal point of view.

“SLE represents family farming businesses that over many generations have led the way in not only quality food production but also providing positive environmental and economic outputs for Scotland – something which would be placed at risk by the relief’s removal.”

Debates on land value tax

Laing continued:

“Land value tax has been debated for many years but has not been taken forward by any administration because of the potential impact it may have on not just rural Scotland, but the whole of the country.

The introduction of land value tax would have an impact on every corner of Scotland, both rural and urban – so it should be recognised that this would not be solely a land reform tool.

“In a rural context, these taxation proposals would have an effect across the entire Scottish countryside, not simply on ‘estates’ or ‘large landowners’.

“It could have an impact on delivering local communities’ aspirations and it would discourage those providing investment, from housing developers, to forestry businesses and farmers.

Rural businesses, which invest heavily across Scotland, are already subject to a very well established and complex tax regime and it should be pointed out that land value taxation is, in effect, already in existence in the form of capital gains tax, inheritance tax and developer contribution when planning permission is granted.

“We believe the impact of any policy change of this magnitude should be considered in terms of our recovery from the economic crisis and not simply be measured in terms of the delivery of political land reform objectives.

“It should also be noted that many of the tax functions highlighted in the report are reserved matters and would have knock-on impacts for the rest of the UK farming,” she concluded.