A proposal to raise the council tax on higher value properties could cause “lasting harm” to the Scottish market and punish those on low incomes still living in the family home, it has been claimed.
The Scottish Government is seeking views on plans to introduce two council tax bands for properties worth more than £1 million and £2m to help fund public services.
The so-called “mansion tax” would lead to increases of £720 and £3,600 respectively above the current highest Band H council tax charges. They would apply to fewer than 1% of properties.
Deputy First Minister and Finance Secretary Jenny Gilruth said: “Our approach to tax is based on fairness – asking the wealthiest among us to contribute a bit more.
“As it stands, some multi-million pound properties have council tax bills that are not materially different from those faced by people living in far more modest homes.
“Our progressive approach to taxation helps to target investment in economic growth, deliver public services and support cost of living measures not available elsewhere in the UK, such as free tuition, free prescriptions and our plans for a £2 bus fare cap across Scotland.
“Additional revenue raised through these new council tax bands will be retained in full by local government to support the local services communities rely on – unlike the UK Government’s proposals for a similar scheme that are set to be returned to the Treasury.”
The Scottish Greens MSP Lorna Slater said: “The launch of this consultation is an important milestone. The mansion tax will raise vital funds for schools, libraries and other local services, while helping to respond to Scotland’s housing emergency.”
Scottish Conservative finance spokesman Craig Hoy said: “This performative proposal is another example of a headline-grabbing SNP idea that falls down on closer inspection.
“In targeting a small minority of properties, the revenues these new bands would bring in won’t touch the sides, and that’s before the administrative costs are factored in.
“But there is a real danger that these punitive rates put people off buying in Scotland, which could damage the entire housing market.
“A mansion tax would also unfairly hit some asset-rich, cash-poor individuals – such as widows on modest pensions who are still living in the family home.
“Like rent controls, a mansion tax sounds superficially attractive but would actually do lasting harm to the housing market.”
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