Land and Buildings Transaction Tax (Scotland) Bill: Stage 3
The next item of business is stage 3 proceedings on the Land and Buildings Transaction Tax (Scotland) Bill. In dealing with the amendments, members should have the bill as amended at stage 2, the marshalled list and the groupings.
The division bell will sound and proceedings will be suspended for five minutes for the first division. The period of voting for the first division will be 30 seconds. Thereafter, I will allow a voting period of one minute for the first division after a debate.
Section 2—Overview
Group 1 is on returns relating to land transactions. Amendment 1, in the name of John Swinney, is grouped with amendments 13, 23 and 27.
Amendment 13 changes section 27, which allows for tax reliefs to be claimed. The amendment is consequential to the introduction at stage 2 of provisions on the taxation of leases.
It is possible that, when a transaction that involves a lease first takes place, there is no requirement to notify the tax authority and therefore no land transaction return is made. Later, however, if the rent is increased or if the period of the lease is extended, the lease may become notifiable and taxable. Amendment 13 will allow the tenant to claim a relief at that point on a return other than a land transaction return.
Amendments 1, 23 and 27 are minor amendments that broaden out references to land transaction returns in sections 2, 48 and 56 so that the sections relate to other returns as well.
I move amendment 1.
Amendment 1 agreed to.
15:15
Group 2 is on minor changes that are consequential on stage 2 and other technical amendments. Amendment 2, in the name of the cabinet secretary, is grouped with amendments 7, 14, 15, 31, 36, 40 to 46 and 67.
The group of amendments covers three areas: some amendments are consequential amendments that flow from the addition of schedule 18A, “Leases”, at stage 2; some amendments correct typographical errors in the bill; and others make minor drafting improvements. The amendments in the group make no other changes of substance.
I move amendment 2.
Amendment 2 agreed to.
Section 5—Exempt interest
Group 3 is on chargeable interest. Amendment 3, in the name of the cabinet secretary, is grouped with amendments 4 and 5.
Amendments 3 to 5 will amend section 5, “Exempt interest”. They are minor consequential drafting amendments that result from changes made to section 4 during stage 2. The phrase “an interest or right”, which occurs three times in section 5—at subsections (2), (4)(a) and (4)(b)—refers to what section 4 used to say, which was:
“an interest, right or power in or over land”.
Now that section 4 uses the phrase
“a real right or other interest in or over land”,
section 5 should be amended accordingly.
I move amendment 3.
Amendments 3 to 5 flow from a change at stage 2 to the definition of chargeable interest. The definition was changed from
“an interest, right or power in or over land”
to
“a real right or other interest in or over land”.
There is no doubt in my mind that all three amendments are an improvement, as was the amendment at stage 2.
However, there is still some doubt about the use of the expression
“other interest in or over land”.
One of the sources that the cabinet secretary quoted at stage 2 is adamant that the definition still lacks clarity. In the absence of a better definition, we will support amendments 3 to 5, but will the cabinet secretary assure Parliament that the door on this is not entirely closed if further information comes to light from the experts whom he has previously quoted?
As part of formulating the bill, the Government sourced well informed advice to enable us to provide the clearest possible legislation. I am satisfied that the provisions that we strengthened at stage 2, which are reflected in the amendments in the group, will put us in a position to have the best amount of clarity that we can have in what is a complex area of activity.
If, with the passage of time and the utilisation of the bill, we see deficiencies in the application and interpretation of the wording, the Government will reflect on the points that Gavin Brown has made. However, I am satisfied that the provisions before Parliament today are appropriate and worthy of Parliament’s support.
Amendment 3 agreed to.
Amendments 4 and 5 moved—[John Swinney]—and agreed to.
Section 6—Acquisition and disposal of chargeable interest
Group 4 is on leases. Amendment 6, in the name of the cabinet secretary, is grouped with amendments 8, 10, 11, 12, 16, 17, 18, 19, 20, 21, 22, 25, 29, 32, 35, 37, 38, 39, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66 and 68.
I apologise for the long speeches that you have to make in chairing the proceedings, Presiding Officer.
The amendments in group 4, which the Presiding Officer read out, are all to do with the tax treatment of leases. Members will be relieved to hear that I do not intend to speak to every amendment in the group; instead, I will highlight some of the more important provisions that are covered.
Schedule 18A runs to more than 15 pages. As members will recall, it was introduced by amendment at stage 2. The length of the schedule demonstrates the complexities and technicalities that arise in seeking to apply taxation fairly and reasonably to the range of commercial situations that arise perfectly legitimately under property law.
In the Finance Committee’s stage 2 session on 5 June, I indicated that my officials and the non-residential leases working group would have a further meeting on 11 June, which might necessitate further refining amendments to the leases schedule. A number of the amendments that are before members are the direct result of the constructive dialogue that took place in that meeting.
For example, amendment 55 will delete paragraph 13 of schedule 18A, which provides that any payment that is made before a lease is granted is to be treated not as rent but as a premium and taxed accordingly. Deleting that paragraph will remove an unnecessary presumption and mean that a payment that is made before the grant of a lease may be treated as rent if it is in fact rent, or as a premium, depending on the nature of the payment.
Other amendments that flowed from the discussions between my officials and the working group include amendment 6, which will ensure that the variation of a lease is not treated as the deemed grant of a new lease, except when paragraph 31 of schedule 18A applies; and amendment 65, which will remove paragraph 26 of schedule 18A. That paragraph would have covered something that does not happen in commercial practice.
I also indicated in the Finance Committee meeting that I would lodge further technical amendments to the bill at stage 3. Those are mainly amendments to earlier parts of the bill that were considered in the committee’s stage 2 session on 29 May.
Many of the amendments in the group were lodged to meet the commitment that I gave. For example, amendment 21 is a consequential amendment to section 40 that flows from the addition of schedule 18A at stage 2. That amendment will mean that, when a tax return is made under paragraphs 10, 11, 21, 23 or 32 of schedule 18A, the tax due or additional tax due must be paid at the same time as the return is made.
Amendments 10 and 20 are other amendments that fall into the technical category. Amendment 10 will insert a reference to paragraph 3 of schedule 18A into section 24 to alert someone who reads section 24 to the fact that the tax rates and tax bands for rent will be set not under that section but under schedule 18A. Amendment 20 will amend section 39 so that it will refer to the various paragraphs in schedule 18A under which returns are made and in relation to which there is a power to specify a different period for making a return.
Perhaps the key amendment of the 40 amendments is amendment 25, which will add a power to amend schedule 18A by regulations. Amendment 29 will ensure that any regulations that are made will be subject to the affirmative procedure.
In light of the complexity of schedule 18A, I consider it prudent for ministers to take a power that will enable them to amend it by secondary legislation. That will provide flexibility for the Scottish ministers to respond quickly and effectively to changing commercial situations.
I can provide further detail in response to issues raised by members.
I move amendment 6.
Amendment 6 agreed to.
Amendment 7 moved—[John Swinney]—and agreed to.
Section 10—Substantial performance without completion
Amendment 8 moved—[John Swinney]—and agreed to.
Section 24—Tax rates and tax bands
Group 5 is on the procedure for orders that set rates and bands. Amendment 9, in the name of Gavin Brown, is the only amendment in the group.
The key question to be answered is: does the Scottish Government believe in evidence-based policy? It is our job to remove from the business community as many layers of uncertainty as we can. Amendment 9 would do that by ensuring that at least 12 months’ notice is given of the rates and thresholds of the tax on non-residential properties.
The Government’s original plan was to publish those rates and thresholds in September 2014 for application in April 2015, but then the Finance Committee took evidence and the business community, across the board, was crystal clear and robust in its view that it needed notice of the rates and thresholds earlier than that. Some businesses said 12 months, some said 18 months and some said now, but they were resolute that the notice had to be sooner than the Government proposed.
We heard evidence from the Scottish Building Federation, the Scottish Property Federation, Homes for Scotland, the Confederation of British Industry Scotland, the Institute of Chartered Accountants of Scotland and many others, all of whom took the same view. The cabinet secretary then announced that he was considering publishing later, because in his view the evidence was mixed. In my view, the evidence was unanimous and the only person who argued that publication ought to be later was the cabinet secretary.
When investors prepare their project assessments, a question mark hangs over LBTT. They cannot put a rate to it, which leaves uncertainty. If an investor is attempting to invest in north-west England, they have a clear number that they can put against stamp duty. If that same investor wishes to invest in Scotland post-April 2015, the figure has to remain blank. As we all know, investors do not like question marks.
I note that the Scottish Government’s response to the committee’s stage 1 report said:
“The Scottish Government will consider the evidence provided to the Committee regarding the timing of the publication of the proposed LBTT rates and bands for both residential and commercial property transactions.”
I ask the Government to consider that evidence and accept amendment 9, to give at least some certainty and remove one layer of uncertainty from the business community.
I move amendment 9.
I support Gavin Brown’s amendment 9. I accept that the cabinet secretary has spoken against such a proposal in the past, and there is a genuine concern about gaming the system and advance knowledge meaning that property deals are brought forward to reduce tax liability. However, the prospect of such activity taking place on any substantive scale must be balanced against the desire of most respectable Scottish businesses to have certainty and confidence in the system.
It is notable that nearly all those who gave evidence were united on that point: Brodies, CBI Scotland, the Chartered Institute of Taxation, the Convention of Scottish Local Authorities, ICAS and the Scottish Property Federation all expressed concern that the rates will not be known.
The fact that the cabinet secretary’s decision seems to pivot on a political date—the date of the referendum, which is September 2014—adds to the worry that he is making a political decision rather than a business-oriented one and that the decision is not driven by the needs of the public finances. It sounds as if, by not announcing a decision until September 2014, he is picking a day to bury bad news, rather than providing stability and certainty for the Scottish property market. I support amendment 9.
I, too, support Gavin Brown’s eminently sensible amendment 9. We are not suggesting that in every single year a year’s notice should be given for any changes. We are suggesting that that should happen in the first year, to provide greater certainty for the sector.
As we know, the construction sector has gone through significant difficulties in recent years, and we should try to reduce as far as possible the uncertainty that might be caused by the situation. Gavin Brown’s suggestion is eminently sensible.
As the finance secretary said this morning, there is a difference of only five months between what he suggests and what Gavin Brown suggests. That gap is not unbridgeable. I suggest that the finance secretary listens to the evidence that has been set out and that he agrees with Gavin Brown.
15:30
I had not intended to speak to the group, but I am a little disappointed at the level of support across the chamber for amendment 9. I challenge the use of the phrase “evidence-based policy”. That phrase is generally used in relation to policy that should be informed by objective data and scientific evidence; we do not use it for the assertion of want.
The evidence that Gavin Brown referred to was simply an expression of the wishes and self-interest of the witnesses who gave evidence. Tax bands and rates are matters on which we have not objective data but the assertion of the business community’s self-interest. It is worth making the distinction between the two.
The issue has certainly attracted commentary. Gavin Brown has set out the opinions of business organisations and companies in the private sector. He is perfectly entitled to do that; their views are stated on the record.
Ken Macintosh’s contribution reinforced Mr Brown’s points and suggested a political motivation on my part for the timing that I originally suggested as being appropriate for the setting of tax rates and bands. None of the contributors made a passing reference to the fact that my motivation—which shows that Mr Macintosh was completely misguided in what he said—in identifying the setting of the tax rates in September 2014 concerns the relationship between the setting of tax rates and the implications for the Scottish Government’s budget. I would not have thought that I had to make that connection in Parliament, given that Parliament requires me to present a budget in September each year.
In the years ahead, Parliament will have to become accustomed to an increasing relationship between the decisions that we take on tax and the decisions that we make on public expenditure. The link between setting our tax rates and bands and the budget that I propose to Parliament is inextricable. I cannot go around setting tax rates at a different stage in the financial year from the setting of the budget, because I could end up setting tax rates in a particular context, such as the one that Mr Brown suggests, and find myself dealing with a different financial circumstance as it emerges during the Parliament’s consideration of the budget process.
I thank the cabinet secretary for his interesting explanation, but how does that fit in with the commitment that the tax will be revenue neutral? I am struggling to see how that is consistent with the idea that the setting of tax rates and bands might change with the general public expenditure situation.
My point is that we should link in the Parliament clearly and simply the decisions that we make about tax rates to the setting of our budget and the commitments that we make that follow from that. For example, the block grant adjustment will apply from April 2015, and we need to know the context and the circumstances in which we take such decisions.
Following the Finance Committee’s call for evidence, it received representations indicating that, in the residential property sector, there was an argument in favour of not setting tax rates in September as I suggest, but setting them much closer to the start of the financial year to avoid any market distortions. If I listened to that evidence, I would delay the setting of tax rates and tax bands until much closer to the start of the financial year, which in my opinion would be unjustifiable and unsustainable.
It is important that we establish the connection between the setting of tax rates and tax bands and the formulation of the budget. I have listened carefully to the points of view that interested parties put forward and, on balance, I recommend that we set tax rates and bands for all transactions as part of the budget process in 2014. I encourage members not to support amendment 9 in Gavin Brown’s name.
I am grateful to members for their comments. I was slightly surprised by Patrick Harvie’s definition of evidence. He said that evidence cannot be classed as such unless it is scientific, objective data. What do people do at every committee of this Parliament, week in and week out? They submit written evidence and they give oral evidence. To suggest that none of that is evidence is to take a rather narrow view.
Will the member give way on that point?
No, I will not.
On the substantive point, the cabinet secretary gave a fairly weak reason for not bringing forward the setting of the rates. He said that the rates cannot be set at any time of the year other than September 2014, when he produces the draft budget. In amendment 9, I propose that the rates should be set “at least 12 months” before the tax is charged. The cabinet secretary could in September 2013—or earlier than that—make the order that set out the thresholds and rates that he has in mind.
The cabinet secretary said clearly that he would consider the evidence and listen to representations from industry. Every single representative said that rates for commercial property—which is what amendment 9 is about—should be set earlier.
Does the member accept that all the evidence that the Finance Committee took came from business representatives and that we did not hear from normal residents and constituents of the country? We must act on their behalf, not just on behalf of business.
The idea is that committees—and John Mason is deputy convener of the Finance Committee—decide who is most likely to represent the stakeholders whom they want to consult and invite them to give written and oral evidence. Of course, there is no limit on who can provide written evidence. The idea that we should ignore the evidence that is presented and prefer what we think might be the view of people from whom we have not heard is a little surprising. Why bother having committees if we are not going to take account of the evidence that they hear?
We should use all the levers that are at our disposal to help business in this country; we should not just use the levers that suit us. I will press amendment 9.
The question is, that amendment 9 be agreed to. Are we agreed?
Members: No.
There will be a division. As this will be the first division in stage 3, I suspend the meeting for five minutes.
15:38
Meeting suspended.
15:43
On resuming—
We will proceed with the division on amendment 9.
For
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baker, Richard (North East Scotland) (Lab)
Baxter, Jayne (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Bibby, Neil (West Scotland) (Lab)
Boyack, Sarah (Lothian) (Lab)
Brown, Gavin (Lothian) (Con)
Carlaw, Jackson (West Scotland) (Con)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Davidson, Ruth (Glasgow) (Con)
Dugdale, Kezia (Lothian) (Lab)
Eadie, Helen (Cowdenbeath) (Lab)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Findlay, Neil (Lothian) (Lab)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Goldie, Annabel (West Scotland) (Con)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Henry, Hugh (Renfrewshire South) (Lab)
Hume, Jim (South Scotland) (LD)
Johnstone, Alex (North East Scotland) (Con)
Kelly, James (Rutherglen) (Lab)
Lamont, John (Ettrick, Roxburgh and Berwickshire) (Con)
Macdonald, Lewis (North East Scotland) (Lab)
Macintosh, Ken (Eastwood) (Lab)
Malik, Hanzala (Glasgow) (Lab)
Martin, Paul (Glasgow Provan) (Lab)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDougall, Margaret (West Scotland) (Lab)
McGrigor, Jamie (Highlands and Islands) (Con)
McInnes, Alison (North East Scotland) (LD)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McMahon, Siobhan (Central Scotland) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
McTaggart, Anne (Glasgow) (Lab)
Milne, Nanette (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Murray, Elaine (Dumfriesshire) (Lab)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Rennie, Willie (Mid Scotland and Fife) (LD)
Scanlon, Mary (Highlands and Islands) (Con)
Scott, Tavish (Shetland Islands) (LD)
Smith, Drew (Glasgow) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Against
Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Brodie, Chic (South Scotland) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Burgess, Margaret (Cunninghame South) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Finnie, John (Highlands and Islands) (Ind)
FitzPatrick, Joe (Dundee City West) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Harvie, Patrick (Glasgow) (Green)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnstone, Alison (Lothian) (Green)
Keir, Colin (Edinburgh Western) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McDonald, Mark (Aberdeen Donside) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Aileen (South Scotland) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMillan, Stuart (West Scotland) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 50, Against 66, Abstentions 0.
Amendment 9 disagreed to.
Amendment 10 moved—[John Swinney]—and agreed to.
Section 25—Amount of tax chargeable
Amendment 11 moved—[John Swinney]—and agreed to.
Section 26—Amount of tax chargeable: linked transactions
Amendment 12 moved—[John Swinney]—and agreed to.
Section 27—Reliefs
Amendment 13 moved—[John Swinney]—and agreed to.
After section 27
15:45
We move to group 6, on energy performance variation. Amendment 69, in the name of Patrick Harvie, is grouped with amendments 73 and 74.
Taken together, the amendments rehearse a debate that Malcolm Chisholm pursued at stage 2 with the proposal to have variations in the level of tax related to energy efficiency as an incentive for property owners to invest in the energy performance of their property, not in order that they will pay a lower level of tax but in order that they can secure a better price for their property because the buyer will pay a lower level of tax.
I have changed the amendments, to some extent, to take account of some of the arguments that were made at stage 2, including by the cabinet secretary. It is worth returning to the general arguments. Even if the Government remains unpersuaded by the amendments, I hope that it will use the opportunity of this discussion to indicate how else it might seek to secure the same objectives.
The basic case in favour of improving the energy performance of our building stock and reducing overall energy waste and energy demand has been well made over many years. In housing, we have taken action in the social rented sector on building standards, and we have put in place some support schemes to allow home owners to access advice and support through particular measures. We are debating an additional tool—an additional mechanism—to provide an incentive for some properties to be brought up to standard.
I agree with what the member is trying to do, but does he feel that it is the most effective way of doing it? There would be a cost. Would it not be better to use the money either to reduce council tax or to give a direct grant for energy efficiency?
That is one of my favourite Sir Humphrey objections—“Ah, but is this the best way, minister?” I am sure that Mr Mason made objections at stage 2 to which he would like to return. For example, he argued that the provision would cover only a small proportion of properties. The measures that we take to improve building standards also apply to only a small proportion of properties in any one year, yet we think that building standards are an important measure—one of the many tools in the box—in improving standards.
Also at stage 2, Mr Mason made the argument that the owners of £1 million mansions might benefit. I do not find that a convincing objection either. Those are often the properties that cost the most to bring up to standard in terms of energy performance. So, to secure a better price on an expensive property such as that, an owner would have to pay more. There is also the question of the context of the bill as a whole, which is that the Government intends to introduce a more progressive form of taxation than the current one, so the owners of such properties would already be paying more under the Government’s proposals. What I propose is a small variation to give them an incentive to consider energy performance.
Will the member take an intervention?
Are we tight for time, Presiding Officer?
You have time to take an intervention.
Does the member not accept that almost the opposite argument to the one that he is making could apply? What he is suggesting could result in a situation in which very poor people become trapped in poor and poorly insulated houses.
I do not accept that argument at all. As the Government is at pains to stress—and it is something that I welcome—low-value properties will be exempt from the tax altogether. The tax simply will not come into play for those properties, and the people in them are often those who will get the most support from the various Government schemes that provide energy efficiency advice and support. For them, an incentive such as the one that I propose is less relevant.
The Government has argued for simplicity as opposed to complexity, which is one of the reasons why I have changed aspects of the amendment that was debated at stage 2. The amendment no longer contains a requirement on Government to introduce such variations; it simply enables Government to introduce variations. There is no 12-month time limit to ensure that the Government has to get it done before it gets it right; it will have the time to develop a system of variation that fits into the wider context of how it wants the taxation to work.
I turn to the objection that the cabinet secretary raised at stage 2 in relation to tenement dwellers and the need to secure the agreement of neighbours if improvements across a whole building are required to achieve the intended objective. As a tenement dweller, I take that very seriously. That is why I introduced in amendment 74 an additional line that will enable the Government to apply the measure differently to different building categories. I hope that that will give the Government the flexibility that it will need to ensure that the appropriate effect is had on all building categories.
I hope that there is a degree of support for the measure. If the real objection is that it is the wrong way to achieve the right aim, I would like to hear from the cabinet secretary a clear commitment on the measures that he intends to take to drive up energy performance in the private sector as a whole and an indication of when he will introduce requirements at the point of sale or let of privately owned properties. It is not enough simply to offer a few subsidised measures on a means-tested basis, as presently happens. The Government will not meet the CO2 emissions reduction targets for the housing sector unless we are proactive in pushing up energy efficiency right across the housing stock.
I move amendment 69.
I thank Patrick Harvie for lodging his amendments. I think that he has listened very carefully to the debate that took place in committee and has realised that the Government strongly objected to his proposal. That is why he has modified his proposal by changing “must” to “may”, which is a highly significant change, because it means that amendment 74 is a permissive amendment and one to which no time limit is attached. Therefore, in a sense, the Government can be unconvinced at this stage but still think that the provision is worth putting in the bill, because—who knows?—in a few years’ time, other factors and considerations might be at play. Amendment 74 means that it would be possible to introduce such regulations at that point.
John Mason asked whether Patrick Harvie’s method was the best way of doing things. I think that that is the wrong way of thinking about this crucial matter. There is not one way of dealing with the problem of energy inefficiency in homes; there are many ways, and Patrick Harvie’s proposed measure could be part of the suite of measures to address it. We should remember that the two biggest challenges for us when it comes to climate change are transport, which we are not discussing today, and existing homes, which we are discussing. Basically, the measure in question is an attempt to help to deal with the energy inefficiency of existing homes.
John Mason also said that there would be a cost. In fact, there would not be. The amendment is designed in such a way as to be revenue neutral. At this stage, I do not think that I would be allowed to make a speech that was long enough to explain how it would operate, although John Mason might well be going to ask me that very question.
Does the member accept that although, overall, the measure would be revenue neutral, if a bit more tax is to be raised from one person and spent on someone else, there would be a cost?
It is clear that some people in energy-inefficient homes would be affected but, as Patrick Harvie said, people in homes of modest value would not be affected, because of the commitments that the cabinet secretary has given on the starting point for the tax.
Another argument that was used in committee that may well be used again is that energy efficiency is not uppermost in people’s minds when they buy a house. That is an argument in favour of amendment 74, because it will put the issue in people’s minds when they buy a house. That is what we need. We should all think about energy efficiency when we buy houses and, indeed, when we heat them, which seems to be every day of the year—at least, that is how it seems at present.
It seems to me that the measure would be to the advantage of sellers and buyers. Some people ask how it would be to the advantage of sellers. They would be in a better position to sell their house, they would have the advantage of being able to sell it more quickly and they might be likely to get slightly more money for it than they would otherwise get. From the buyer’s point of view, the advantage is obvious, in that they would pay less of the new tax.
I know that the Government is very sceptical about the proposal. I was very sceptical when it was first put to me, but the more I have thought about it, the more I have become convinced that it is one—and only one—of several measures that are needed to deal with the urgent issue of the energy inefficiency of all homes, but particularly of existing homes.
As I said in my intervention, I have a lot of sympathy for the aim of Patrick Harvie’s amendments and what he is trying to do. Although Malcolm Chisholm said that he drifted from being sceptical to being positive, I think that I went the other way after the committee had listened to the evidence, which, I have to say, was not very convincing at all. At first, several of us thought that something like this might be feasible. However, when we considered the suggestion in detail, it became apparent that it was a very blunt instrument.
As I have tried to point out already, there is a cost to the proposal, even if, overall, it is revenue neutral. If we are going to raise a bit more tax, the question is, what is the best that we can do with those resources? I am far from being convinced that the best thing to do is to create incentives through LBTT, when, perhaps, we could do better by using a grant to directly help people to improve their homes, or a council tax reduction, which would give them an incentive immediately, or at least the following year.
The kind of adjustment that we are talking about helps people only if the house is sold or purchased. If a house is not sold or purchased, there is no incentive whatever. Malcolm Chisholm suggests that the proposal is a way of raising awareness. I think that there are other and perhaps better ways of raising awareness.
The strongest reason against the proposal, for me, is that a lot of my constituents are buying houses for less than £100,000. That means that they will pay no LBTT, so there will be no incentive. The amendment would affect better-off people in the bigger houses, and would do nothing for the less well-off people in the smaller houses. For me, that is a convincing argument that this is not the way in which to use the limited resources that we have.
John Mason’s last point was interesting, because he is implying that we are really only interested in carbon emissions in relation to the smaller, less expensive houses. I think that the opposite is the case. We should be looking to tackle climate change wherever the emissions come from. That, to me, is the most important aspect of what we are trying to do. Some of the biggest houses emit some of the greatest amounts of carbon. Therefore, I support Patrick Harvie’s amendment. I think that it gives us an opportunity to change the way in which we view buildings. When people buy and sell properties, they should think not only of the value of the property but also of its long-term, sustainable future and how much it will cost to run it, part of which should involve a consideration of tax. That would be a valuable way in which to proceed, and the fact that the proposal does not deal with every house in the country does not mean that it is not worth proceeding with. It seems to be an eminently sensible way of focusing people’s minds and getting them to think about the energy efficiency of their properties, just in case they want to sell at some point in the future.
Further, including this proposal in the bill does not prevent other measures from coming forward in other bills. A variety of different measures can be introduced by the Government.
I support the amendment in Patrick Harvie’s name, and urge the Government to support it too.
I, too, want to speak in support of Patrick Harvie’s amendment, which is similar to one that Malcolm Chisholm lodged at stage 2.
The key motivation behind the proposal is the desire to encourage the uptake of energy efficiency measures and to help Scotland—and, for that matter, the Scottish Government—to meet its carbon reduction targets.
Many of the arguments at stage 2 were evenly balanced. On the Government’s part, there is a desire not to introduce new tax relief, but to remove tax relief from the stamp duty system and to not replace it in the LBTT system. Broadly, we support that approach. However, the Government did not think that that should be applied absolutely across the board. In its consultation on the bill, the Government said:
“The replacement of SDLT with a Land and Buildings Purchase Tax also offers the opportunity to support key Scottish Government priorities through incentivisation.”
Clearly, meeting our carbon emission targets is a priority.
The Government’s Climate Change (Scotland) Act 2009 requires local authorities to establish a scheme for reducing the amounts that persons are liable to pay in respect of council tax where improvements are made to the energy efficiency of chargeable dwellings. In other words, the Government acknowledges that there is a way for taxation to be used to establish better energy efficiency. Why not do so in the case of LBTT?
I encourage the Government to support Patrick Harvie’s amendment.
As we are nearing the agreed time limit, I am prepared to exercise my power under rule 9.8.4A(c) to allow the debate on the group to continue beyond the time limit, to avoid the debate being unreasonably curtailed.
16:00
I thank Mr Harvie for lodging the amendments. He and I have form in parliamentary debates on energy efficiency and home insulation issues. Hopefully, we can make progress today where we might not have managed it in the past.
Amendments 69, 73 and 74 are intended to introduce a regulation-making power to the bill that allows for the amount of LBTT to be paid for a residential property transaction to vary, depending on the energy efficiency rating for the house. Although the amendments do not provide for it, presumably there would have to be some sort of benchmark against which the energy rating of each house would be assessed in order to calculate the tax due. That benchmark might, for example, be the average energy rating for all housing in Scotland. That proposal has been advanced by the existing homes alliance and my officials have met the proposers to consider the issues.
The Government is entirely supportive of steps to improve the energy efficiency of Scotland’s housing stock and has taken a number of steps to make such improvements. While it is important to examine all legislative instruments to determine whether any measures can be taken forward, it is vital also to assess the impact that any proposed measures might have.
In the bill, there is a balance to be struck between the need for a simple, certain and efficient tax system and the likely energy efficiency improvements that would flow from the change proposed to the calculation of tax liability on the sale of residential property. Far from providing more simplicity and certainty, the amendments would add complexity and uncertainty to the tax. No house buyer would know at the outset how much tax would be payable on a house of a particular value. Additional information would be required in order to calculate the liability, and that information might change over time.
Following the submission of a tax return, the energy rating for every house sale would have to be verified by revenue Scotland to ensure that the tax was calculated accurately. That requirement would add considerably to revenue Scotland’s administrative burden. Aside from the administrative complexity, the proposal would have no effect whatever on housing in the nil rate band of the tax.
In 2011, there were 1.9 million privately owned dwellings in Scotland, and 70,000 sales, representing 3.7 per cent of the market. The land and buildings transaction tax consultation paper set out two scenarios to illustrate how a progressive tax might operate in the residential property market. In scenario 1, 70 per cent of the housing market would be excluded from the tax. That means that, in any given year, the tax would apply to only 1.1 per cent of the existing stock, or 21,000 properties.
Mr Rennie encouraged us to support amendment 69 on the basis that it does not deal with every single house. There is a long way to go from 1.1 per cent of existing stock to 100 per cent. Even if the figures were doubled to reflect a more active property market, the land and buildings transaction tax does not appear to represent an effective mechanism to influence the energy efficiency of the entire housing stock.
The proposal would also have a number of disproportionate effects on the housing market. First, as has been commented upon already, under the proposal the least energy-efficient properties would, arguably, be less attractive to buyers as they would incur more tax. Owners of flats would find it very difficult to secure the agreement of other owners to undertake any form of repairs or improvements. In my view, it would be unfair to penalise the owners and buyers of flats who would like to increase their energy performance certificate rating but find that they cannot do so because of a lack of agreement. Flats comprise around four in 10 of Scotland’s housing stock and 74 per cent of the housing stock in the city of Glasgow.
Secondly, the scheme is intended to apply—
Does the cabinet secretary accept that I have taken account of that concern in the changes to the amendment? Surely it is not beyond the wit of him or his colleagues in the civil service to come up with variations on the measure that would take account of those different building categories.
I appreciate that point, but it perhaps reinforces the point that I have just made to Parliament about complexity, because we would then have to design a variety of different reliefs and exemptions to deal with different housing structures, all of which would have to be verified by revenue Scotland to guarantee that the appropriate tax had been paid.
The scheme is intended to apply to every subsequent transaction involving the same house, so tax benefit would therefore continue to accrue on houses in which home owners had undertaken no investment in energy efficiency measures. However, another owner might have implemented a number of improvements, costing say £5,000, to achieve a standard assessment procedure—or SAP—rating of say 60, but more tax would still be due on that property than if the scheme did not exist. Achieving a rating of 60 can be very challenging for properties, often in our island and Highland communities, that are using certain types of fuel such as liquefied petroleum gas.
Finally, and fundamentally, it is not clear that the proposal that underpins these amendments would have a direct positive impact on the energy efficiency of Scotland’s housing stock. It is the seller of the house who undertakes energy efficiency measures, but the buyer of the house who incurs the tax on the transaction. Because of that disconnect, the proposal would provide no direct incentive for additional energy efficiency measures to be introduced to Scotland’s housing stock by the people who actually occupy the properties.
I want to make two further points in relation to these amendments.
Please make them briefly, if you would.
I will, Presiding Officer.
Malcolm Chisholm said that the amendment says “may” rather than “must”. Section 27(3) of the bill provides that
“The Scottish Ministers may, by order, modify this Act so as to ... add a relief”.
If the Government wants to add a relief, it will have that power already—providing that the Parliament agrees to pass the bill.
Ken Macintosh kind of implied that he was criticising the Government for even asking in the consultation paper whether there were energy efficiency measures that we could take. We asked that question to try to design measures that were able to have an impact. We have not been able to find them here. That will not stop us looking for other measures in terms of our capital programme to put energy efficiency measures into Scottish houses; since 2008, 540,000 Scottish houses have received over 620,000 free or subsidised cavity wall or loft insulation measures. We will continue with that. We will also continue to encourage local authorities to take up council tax discount schemes, which strike me as a more effective approach, which was provided for in the Climate Change (Scotland) Act 2009.
Although my arguments have run contrary to the proposals put forward by Patrick Harvie, the Government is committed to working to improve the energy efficiency of Scotland’s housing stock and we will find other ways of ensuring that effective measures can be taken in that respect.
Many thanks. As we are now pressed for time, I call Patrick Harvie to wind up briefly and to indicate whether he will press or withdraw amendment 69.
I have to admit that I am disappointed that the cabinet secretary did not specify what measures he will bring forward, given that he thinks that the ones that I am suggesting are the wrong ones.
It seems to me that dramatic improvements in the energy performance of our housing stock can be achieved by paying for them directly by subsidising measures, by providing incentives, such as the one that I am suggesting, or by providing compulsion. I have worked long and hard persuading the Government to do more on subsidising measures and it has come some way over that time. We need to start putting in place real incentives. It might be necessary in the longer term to look at compulsion, but if we want to avoid that, we need to get all the incentives in place that we can.
The cabinet secretary is still concerned that what I propose will benefit buyers, not sellers and that sellers will have to invest and buyers will gain the benefit. I think that that point was answered best by Malcolm Chisholm, who was the first member to recognise that this is a bit of a trigger idea. Let us remember that buyers and sellers are the same people. If someone buys a property, they are likely to sell it on at some point. It is about encouraging people to think about that transaction in thinking about how they can address energy performance.
I would like to respond to all the members who have spoken, but I am aware that the Presiding Officer asked me to be brief. I simply put on record my gratitude to the members who spoke in support of my amendments. The cabinet secretary’s disagreement with them is on the basis that they would not deal with every single home and that we have a long way to go before we can deal with every single home. That is absolutely the correct argument, but the answer has to be, “If this isn’t the best way, what is?” In pressing amendment 69 to the vote, but anticipating that it will fall, I urge the cabinet secretary to return to the chamber after the summer recess with clear proposals on how else the important objective of ensuring energy efficiency will be secured.
The question is, that amendment 69 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baker, Richard (North East Scotland) (Lab)
Baxter, Jayne (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Bibby, Neil (West Scotland) (Lab)
Boyack, Sarah (Lothian) (Lab)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Dugdale, Kezia (Lothian) (Lab)
Eadie, Helen (Cowdenbeath) (Lab)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Findlay, Neil (Lothian) (Lab)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Harvie, Patrick (Glasgow) (Green)
Henry, Hugh (Renfrewshire South) (Lab)
Hume, Jim (South Scotland) (LD)
Johnstone, Alison (Lothian) (Green)
Kelly, James (Rutherglen) (Lab)
Macdonald, Lewis (North East Scotland) (Lab)
Macintosh, Ken (Eastwood) (Lab)
Malik, Hanzala (Glasgow) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Martin, Paul (Glasgow Provan) (Lab)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDougall, Margaret (West Scotland) (Lab)
McInnes, Alison (North East Scotland) (LD)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McMahon, Siobhan (Central Scotland) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
McTaggart, Anne (Glasgow) (Lab)
Murray, Elaine (Dumfriesshire) (Lab)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Rennie, Willie (Mid Scotland and Fife) (LD)
Scott, Tavish (Shetland Islands) (LD)
Smith, Drew (Glasgow) (Lab)
Against
Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Brodie, Chic (South Scotland) (SNP)
Brown, Gavin (Lothian) (Con)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Burgess, Margaret (Cunninghame South) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Carlaw, Jackson (West Scotland) (Con)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Davidson, Ruth (Glasgow) (Con)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Finnie, John (Highlands and Islands) (Ind)
FitzPatrick, Joe (Dundee City West) (SNP)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Goldie, Annabel (West Scotland) (Con)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnstone, Alex (North East Scotland) (Con)
Keir, Colin (Edinburgh Western) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lamont, John (Ettrick, Roxburgh and Berwickshire) (Con)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McDonald, Mark (Aberdeen Donside) (SNP)
McGrigor, Jamie (Highlands and Islands) (Con)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Aileen (South Scotland) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMillan, Stuart (West Scotland) (SNP)
Milne, Nanette (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Scanlon, Mary (Highlands and Islands) (Con)
Smith, Liz (Mid Scotland and Fife) (Con)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 40, Against 77, Abstentions 0.
Amendment 69 disagreed to.
Group 7 is on relief for transactions involving transfer of rights. Amendment 70, in the name of Gavin Brown, is grouped with amendment 72.
The objective is to make the business environment as competitive as possible. Amendments 70 and 72 specifically relate to sub-sale relief and forward funding. In my view, that is a potentially important relief. We should reject the aspects that are abused in relation to stamp duty, but we should retain the aspects that help our economy, especially at a time when bank lending is being reduced and forward funding is becoming more important—at least for now—within our economy.
Amendment 70 would introduce a mandatory measure in the sense that it would force the Government to consult and to bring in a relief. It would, however, give the Government a fairly wide degree of flexibility on precisely what ought to be encapsulated to produce a targeted approach to sub-sale relief.
Amendment 72 simply follows on from amendment 70 and would mean that any regulations that were made would have to be subject to affirmative procedure.
In evidence to the Finance Committee, it was suggested that it would be possible to reduce tax avoidance through making people claim formally for the relief, through allowing it only when no other reliefs were being claimed at the same time, and by having a focused and targeted range of options, particularly in relation to house building, part exchange, certain rural and farming transactions and forward funding as a whole.
The Scottish Government’s response to the committee’s report said:
“the Government wants to ensure that forward funding arrangements are not subject to double taxation under LBTT, and will work with key stakeholders to achieve this objective.”
Amendments 70 and 72 would make that objective more likely.
I move amendment 70.
Although we have some sympathy for Gavin Brown’s amendments, I will move against him on this issue. We know that SDLT is susceptible to a number of avoidance measures, and the evidence suggests that the existing sub-sale relief, which involves transfer of property to a third party, is a significant avenue for tax avoidance. Two of the chief aims of the bill are to simplify SDLT and to reduce the high incidence of tax avoidance. I appreciate that it is not the intention behind Gavin Brown’s amendment 70, but it seems that it would be contrary to the spirit of the bill to support amendments that could lead to tax-avoidance measures being watered down.
That said, we are sympathetic to the arguments that have been put forward by the Scottish Property Federation, which has suggested that an unintended consequence of the withdrawal of sub-sale relief would be to inhibit forward-funding arrangements, which are important in the context of financing major commercial developments. It is important, in seeking to protect LBTT against tax avoidance, that we do not inadvertently introduce a competitive disadvantage that could drive commercial developments to other parts of the UK. The SPF has suggested that the Government commit to identifying a relief using section 27 of the bill; I would welcome the cabinet secretary’s comments on that.
16:15
I agree with an awful lot of what Gavin Brown and Ken Macintosh have said. The issue is a difficult one with which the Finance Committee has wrestled. Mr Brown made the fair point that nobody wants to make Scotland less competitive for such transactions, and Mr Macintosh made the fair point that we do not want to open Scotland up for tax avoidance. I sympathise with both those positions.
However, I cannot support Mr Brown’s amendments. The fundamental weakness at their heart is the absence of a definition of “transfer of rights”. That term could apply to any property transaction, so if we were to accept Mr Brown’s amendments we could open up a wide possibility for additional reliefs. I do not think, having listened to Mr Brown, that that is his intention, but it would be a consequence of the amendments in the group.
As I have stated to the Finance Committee and in the chamber at stage 1, I have no intention of replicating in devolved taxes the particular provisions that have given rise to tax-avoidance activity. That is why I chose not to replicate the sub-sale rules in the UK legislation when the bill was introduced. The Finance Committee and key stakeholders have supported that stance. However, concerns have been raised—with which that committee is familiar—that the absence of a form of sub-sale relief could have a negative impact on transactions that depend on forward-funding arrangements.
I do not at this stage want to introduce measures that might, without proper due consideration, simply create opportunities for tax-avoidance activity. I have no wish for history to repeat itself in the formulation of such measures.
When the Finance Bill 2003—which became the Finance Act 2003—was introduced at Westminster, it contained no equivalent of what became section 45 of the act, which sets out the so-called transfer of rights rules. Section 45 was inserted following lobbying by the development sector during the bill’s passage. I believe that that was done with the best of intentions, but I draw the parallel to highlight the fact that making a hasty amendment to legislation could lead to a provision that has a far wider scope than Parliament intended. Scottish ministers have no intention of making the same mistake.
However, I acknowledge two things. First, the revamped transfer of rights rules are currently making their way through Westminster in the Finance Bill 2013, and we will monitor their progress with interest. Secondly, the valuable meetings that stakeholders have had with me and with officials have highlighted the importance of being able to apply a form of sub-sale relief in development transactions. Those discussions have also highlighted the complexity of such transactions, and the consequent need to take care to ensure that we do not inadvertently create opportunities for avoiding LBTT, as has been the case with stamp duty land tax.
I am therefore prepared to consider further whether measures can be drafted to address the issues that the industry has raised with me without jeopardising the integrity of the bill. I am prepared to consider a measure by which relief should be available only when development is contemplated and takes place within a given period. I will not agree to relief being available to parties who acquire land speculatively and do not bring that land into use.
I would require that any relief ought to be subject to pre-clearance, which would involve the taxpayer alerting the tax authorities in advance to a claim for relief on their part of a transaction, and the tax authority—in this case revenue Scotland—indicating whether such a claim would be accepted or rejected on the basis of the information that has been provided.
I envisage that a form of clawback of any relief that was granted by the tax authority will be applied. The principle of granting relief and then withdrawing it if circumstances change is already established in the bill in the case of group relief. That clawback would involve the tax authority being able to call for payment of LBTT that had been relieved if the conditions of the relief were not met. The provision would most likely be used if development did not take place within a certain timeframe.
There are other considerations. For instance, we need to settle the basis for the LBTT charge where there are several options, and we need to adopt an approach that is fair to the taxpayer but which also reflects the right amount of tax. We will also want to ensure that the correct LBTT charge is levied where part of the plot is sold on to another developer at an enhanced value. Those issues require further work, including with stakeholders.
Commercial arrangements are complex and many contracts are confidential, so many of the questions are not easy to answer. A further key consideration is what anti-avoidance provision the legislation should make. To assist me in answering the questions and resolving issues, I will convene a working group. I have written today to invite a number of interested parties to join that group to explore those issues. One outcome of the group’s work might be that I decide to use the power that will be afforded by section 27(3) of the bill, to which Mr Macintosh referred, to provide a new relief that would apply to sub-sale transactions. I have made clear, however, the conditions that I believe should apply to any such relief. Any such order would, of course, be subject to parliamentary scrutiny.
I want to be very clear with Parliament and the industry that if the outcome of the working group’s work does not convince me that a relief can be given without significant risk of tax-avoidance activity, the Government will not bring an order to Parliament. I reiterate that I have no intention of devolved taxes becoming vehicles for avoidance.
In all those circumstances, and given the Finance Committee’s strong support for not giving scope for tax-avoiding behaviour, I invite Mr Brown to acknowledge the commitment that the Government has demonstrated in considering the issue, and not to press amendment 70 in advance of further detailed work being undertaken as quickly as we can do it.
I start by saying that Mr Swinney has engaged on the issue during the passage of the bill and I welcome many of his remarks, particularly on the convening of a working group of expert stakeholders.
I still think that we are probably still slightly apart in terms of what I want and what the cabinet secretary wants. His premise rests on section 27 using the word “may” while my amendment rests more on use of the word “must”, in that the amendment says that the Government must bring an order to Parliament.
I do not think that amendment 70 is quite as wide as the cabinet secretary has suggested. It would allow the Government to decide on the appropriate stakeholders to consult, although that group is almost obvious from the work that has been done already. It would also allow the Government to decide on the rights that appear to be appropriate, but it would have to make an order.
I hear the distinction that Mr Brown makes between his position and mine and the use of “must” as opposed to “may”. The position that I have adopted is safer for Parliament because it protects the bill’s integrity, which is what I have to consider. I do not want Parliament to oblige the Government to introduce legislation, because we might find that it is impossible to provide a sufficiently robust proposition to prevent any tax avoidance. The whole Parliament wishes not to repeat the mistakes that were made with the stamp duty land tax legislation.
I welcome the cabinet secretary’s intervention, but things have moved on substantially since the stamp duty land tax legislation was brought into force. Indeed, as he said, changes have been afoot for some time at UK level to substantially minimise tax avoidance.
We are still some distance apart. There is a balance to be struck between being competitive and minimising aggressive avoidance of tax. I find it difficult to foresee circumstances in which the cabinet secretary could convene a working group that could propose no form of tax relief whatever. From examining what has happened south of the border and listening to the evidence that has been given at the Finance Committee, I am sure that the legislation will be far tighter up here. I cannot foresee any circumstances in which nothing can be proposed.
The Scottish Government has tipped the balance slightly away from our being competitive, although I do not think that we are miles apart, Presiding Officer, but on that basis, I will press amendment 70.
The question is, that amendment 70 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Bibby, Neil (West Scotland) (Lab)
Brown, Gavin (Lothian) (Con)
Carlaw, Jackson (West Scotland) (Con)
Davidson, Ruth (Glasgow) (Con)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Goldie, Annabel (West Scotland) (Con)
Johnstone, Alex (North East Scotland) (Con)
Lamont, John (Ettrick, Roxburgh and Berwickshire) (Con)
McGrigor, Jamie (Highlands and Islands) (Con)
Milne, Nanette (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Scanlon, Mary (Highlands and Islands) (Con)
Smith, Liz (Mid Scotland and Fife) (Con)
Against
Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baker, Richard (North East Scotland) (Lab)
Baxter, Jayne (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Boyack, Sarah (Lothian) (Lab)
Brodie, Chic (South Scotland) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Burgess, Margaret (Cunninghame South) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Dugdale, Kezia (Lothian) (Lab)
Eadie, Helen (Cowdenbeath) (Lab)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Findlay, Neil (Lothian) (Lab)
Finnie, John (Highlands and Islands) (Ind)
FitzPatrick, Joe (Dundee City West) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Harvie, Patrick (Glasgow) (Green)
Henry, Hugh (Renfrewshire South) (Lab)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hume, Jim (South Scotland) (LD)
Hyslop, Fiona (Linlithgow) (SNP)
Keir, Colin (Edinburgh Western) (SNP)
Kelly, James (Rutherglen) (Lab)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Macdonald, Lewis (North East Scotland) (Lab)
Macintosh, Ken (Eastwood) (Lab)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Malik, Hanzala (Glasgow) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Martin, Paul (Glasgow Provan) (Lab)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDonald, Mark (Aberdeen Donside) (SNP)
McDougall, Margaret (West Scotland) (Lab)
McInnes, Alison (North East Scotland) (LD)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Aileen (South Scotland) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McMahon, Siobhan (Central Scotland) (Lab)
McMillan, Stuart (West Scotland) (SNP)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
McTaggart, Anne (Glasgow) (Lab)
Murray, Elaine (Dumfriesshire) (Lab)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Rennie, Willie (Mid Scotland and Fife) (LD)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Scott, Tavish (Shetland Islands) (LD)
Smith, Drew (Glasgow) (Lab)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 14, Against 102, Abstentions 0.
Amendment 70 disagreed to.
Section 30—Notifiable transactions
Amendments 14 to 16 moved—[John Swinney]—and agreed to.
Section 31—Return where contingency ceases or consideration ascertained
Amendment 17 moved—[John Swinney]—and agreed to.
Section 32—Contingency ceases or consideration ascertained: less tax payable
Amendment 18 moved—[John Swinney]—and agreed to.
Section 36—Declaration
Amendment 19 moved—[John Swinney]—and agreed to.
Section 39—Power to amend period in which returns must be made
Amendment 20 moved—[John Swinney]—and agreed to.
Section 40—Payment of tax
Amendment 21 moved—[John Swinney]—and agreed to.
Section 41—Application to defer payment in case of contingent or uncertain consideration
Amendment 22 moved—[John Swinney]—and agreed to.
Section 48—Joint buyers
Amendment 23 moved—[John Swinney]—and agreed to.
Section 49—Partnerships
Group 8 is on partnerships. Amendment 71, in the name of Gavin Brown, is the only amendment in the group.
The partnership provisions have received a fair bit of criticism from stakeholders throughout the passage of the bill. The bill is trying to create a tax that is based on Scots law—its principles and practice—and in many areas, it has achieved that remarkably well. However, the partnership provisions, which are a considerable part of the bill, broadly mirror the much criticised stamp duty land tax provisions, give or take a few amendments.
At stage 2, I tried to have schedule 17 deleted in its entirety; that attempt was defeated. The cabinet secretary’s primary argument at stage 2 was that he was concerned about there being a vacuum. Amendment 71 has tried to take on board the main concerns that were raised by the Government. It means that the Government must review schedule 17 before the tax is first charged and that it must consult. However, it would not force the Government to use the regulatory power; it simply says that when the Government does not use that power under section 49, it has to explain why. It is an attempt to take on board criticisms and complaints and to take things forward in a different direction.
I move amendment 71.
I support amendment 71, which is in Gavin Brown’s name. Clearly, much concern was expressed in evidence to the committee about the effectiveness of schedule 17, which has been pretty well copied in its entirety from the stamp duty land tax legislation. Amendment 71, as I understand it from Mr Brown, simply asks for a review. It will be two years before the legislation is implemented, which I would have thought is plenty of time for the minister to carry out a review. On balance, given the timeframe, it seems reasonable to accept Mr Brown’s amendment.
As I acknowledged previously to the Finance Committee, the partnership provisions in the bill are complex, but having been part of the SDLT legislation, they will deliver two policy objectives that I believe are fair and which I wish to retain. The first is that partnerships will get partial relief from LBTT when they acquire a chargeable interest in property from a partner, to reflect the partner’s retained interest in the property. The same principle will apply when a chargeable interest is taken out of a partnership. At this stage, I have no intention of interfering with that well-established relief.
The second objective is to minimise the risk that transactions involving partnerships become a means of avoiding LBTT. Schedule 17 contains a number of provisions to tackle avoidance. On 5 June, I gave an assurance to the Finance Committee in response to amendments on the provision that were lodged at stage 2 by Mr Brown. I undertook that officials would discuss with stakeholders the issues that they felt should be addressed. In making that commitment, I was conscious that it may be possible to address many of the issues by having clear guidance to accompany the legislation. If legislative change proves to be necessary to address the issues, we have already included at stage 2 a regulation-making power that will enable us to amend schedule 17.
As I stated to the Finance Committee on 5 June, I do not want to anticipate the outcome of the discussions on the partnership provisions. I will keep the committee abreast of progress in those discussions and, if recommendations to amend schedule 17 emerge, I will return to Parliament in due course with legislative proposals for its approval.
From his amendment 71, I infer that Gavin Brown wishes to use the bill to oblige me and my officials to work with stakeholders on the partnership provisions without defining the objectives. In the light of my earlier commitment—which I have repeated today—that officials will work with stakeholders to understand their concerns about the provisions, and to seek to meet those concerns through either better guidance, legislative change or both, and in the light of my commitment to update the Finance Committee on any progress, I invite Mr Brown to seek to withdraw amendment 71.
16:30
I invite Gavin Brown to wind up the debate and to press or withdraw amendment 71.
The provisions are complex. Many professionals say that they simply do not understand properly how the provisions operate, so there is a need for root-and-branch reform. Many of the provisions are also rooted in English law, as opposed to Scots law.
I had thought that the cabinet secretary would go slightly further today. The idea of consulting or speaking with stakeholders is well and good, but the Government will not be obliged to do anything. I have a genuine fear that, because the issue is complex and may be seen as unexciting, the matter might drift slightly, such that we end up in April 2015 with exactly the same—or broadly the same—schedule 17 as we have currently.
Having listened carefully to the evidence that has been given by stakeholders and people who engage with such issues daily and weekly, I think that the issue is too important to leave to chance. I believe that we need a provision that would force the Government to follow the matter through. On that basis, I will press amendment 71.
The question is, that amendment 71 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baker, Richard (North East Scotland) (Lab)
Baxter, Jayne (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Bibby, Neil (West Scotland) (Lab)
Boyack, Sarah (Lothian) (Lab)
Brown, Gavin (Lothian) (Con)
Carlaw, Jackson (West Scotland) (Con)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Davidson, Ruth (Glasgow) (Con)
Dugdale, Kezia (Lothian) (Lab)
Eadie, Helen (Cowdenbeath) (Lab)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Findlay, Neil (Lothian) (Lab)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Goldie, Annabel (West Scotland) (Con)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Henry, Hugh (Renfrewshire South) (Lab)
Hume, Jim (South Scotland) (LD)
Johnstone, Alex (North East Scotland) (Con)
Kelly, James (Rutherglen) (Lab)
Lamont, John (Ettrick, Roxburgh and Berwickshire) (Con)
Macdonald, Lewis (North East Scotland) (Lab)
Macintosh, Ken (Eastwood) (Lab)
Malik, Hanzala (Glasgow) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Martin, Paul (Glasgow Provan) (Lab)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDougall, Margaret (West Scotland) (Lab)
McGrigor, Jamie (Highlands and Islands) (Con)
McInnes, Alison (North East Scotland) (LD)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McMahon, Siobhan (Central Scotland) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
McTaggart, Anne (Glasgow) (Lab)
Milne, Nanette (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Murray, Elaine (Dumfriesshire) (Lab)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Rennie, Willie (Mid Scotland and Fife) (LD)
Scanlon, Mary (Highlands and Islands) (Con)
Scott, Tavish (Shetland Islands) (LD)
Smith, Drew (Glasgow) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Against
Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Brodie, Chic (South Scotland) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Finnie, John (Highlands and Islands) (Ind)
FitzPatrick, Joe (Dundee City West) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Harvie, Patrick (Glasgow) (Green)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnstone, Alison (Lothian) (Green)
Keir, Colin (Edinburgh Western) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McDonald, Mark (Aberdeen Donside) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Aileen (South Scotland) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMillan, Stuart (West Scotland) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 51, Against 65, Abstentions 0.
Amendment 71 disagreed to.
Section 50—Trusts
Group 9 is on trusts. Amendment 24, in the name of the cabinet secretary, is grouped with amendment 28.
Amendment 24 will add a power to amend schedule 18, entitled “Trusts”, by regulations.
Amendment 28 will ensure that any regulations that are made will be subject to affirmative procedure. Given that we amended the bill at stage 2 to modify schedule 17, and given that partnerships and trusts are intrinsically linked, we consider it necessary to have the flexibility to amend schedule 18, too.
I move amendment 24.
Amendment 24 agreed to.
Section 55—Application of this Act to leases
Amendment 25 moved—[John Swinney]—and agreed to.
Section 51A—Application of this Act to licences
Group 10 is on licences. Amendment 26, in the name of Gavin Brown, is grouped with amendments 30 and 33.
I start by acknowledging the work that has been carried out by the Scottish Government bill team and John Swinney, who have listened to much of what has been said. We have therefore ended up with a very different position at stage 3 from what we had when the bill was introduced.
Amendment 26 would force a consultation before any new types of licence are brought into the scope of the tax. Stakeholders have raised a particular concern about hotel operator licences. Does the cabinet secretary have anything to say about that?
Amendment 30 would mean that changes would have to be subject to affirmative procedure, and amendment 33 would remove them from a slightly lighter procedure.
As I said, the Government has listened, but there is one issue on which I will contend slightly. In response to what I said in the stage 1 debate, the cabinet secretary said:
“I confirm that there will be an indication of the licences that are included in the scope. The bill will specify which licences will be covered rather than seek to establish a comprehensive list of all the circumstances that are not covered. I hope that that helps members.”—[Official Report, 25 April 2013; c 19063.]
We know that none is covered at the moment, but we do not have a clear enough indication from the Government of what the cabinet secretary is thinking about covering.
I move amendment 26.
I indicate our support for Gavin Brown’s amendments 26, 30 and 33.
Currently, property under licence will be exempt from LBTT. My understanding of amendment 26 is that it relates to prescribing certain types of property made under licence that would be treated as land transactions and would therefore be liable for the tax, and I understand that the cabinet secretary suggested earlier that he would consult stakeholders on those matters before introducing regulations. My understanding is that the amendment simply calls for consultation and suggests that subordinate legislation on licences would be subject to affirmative procedure. That strikes me as something that members would support.
I will speak to amendment 26 before I turn my attention to amendments 30 and 33.
As Mr Brown has explained, amendment 26 would place a duty on the Scottish ministers to consult interested parties before prescribing which licences to occupy non-residential property are to be subject to land and buildings transaction tax. I have already given a commitment at stage 2 to consult on such proposals. In response to a question from Mr Brown in the Finance Committee meeting on 29 May, I explained that
“during the passage of the bill we will not define the type of licence that will be considered for LBTT; we will do that separately, through secondary legislation”.
I went on to say:
“The proposed approach is clearer and will be more administratively efficient. Of course, there will be consultation around and consideration of the secondary legislation that emerges on the issue.”—[Official Report, Finance Committee, 29 May 2013; c 2699-2700.]
I am happy to repeat that assurance today. In that light, I ask Mr Brown to seek to withdraw amendment 26.
Mr Brown asked me specifically about hotel operator licences. I think that I made it clear in what I said on the record at stage 2—although I will have to confirm this—that hotel operator licences would not be part of the scope of consideration. I will check whether that is correct.
The purpose of amendments 30 and 33 is to ensure that all regulations that are made under section 51A(1) of the bill are subject to affirmative procedure. Those amendments are entirely in order, and I encourage members to support them, but I invite Mr Brown to seek to withdraw amendment 26.
Because the Government said at stage 1 that it would say what is included, I am minded to press amendment 26 purely so that it forces the Government to consult. On that basis, I press amendment 26.
The question is, that amendment 26 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Baillie, Jackie (Dumbarton) (Lab)
Baker, Claire (Mid Scotland and Fife) (Lab)
Baker, Richard (North East Scotland) (Lab)
Baxter, Jayne (Mid Scotland and Fife) (Lab)
Beamish, Claudia (South Scotland) (Lab)
Bibby, Neil (West Scotland) (Lab)
Boyack, Sarah (Lothian) (Lab)
Brown, Gavin (Lothian) (Con)
Carlaw, Jackson (West Scotland) (Con)
Chisholm, Malcolm (Edinburgh Northern and Leith) (Lab)
Davidson, Ruth (Glasgow) (Con)
Dugdale, Kezia (Lothian) (Lab)
Eadie, Helen (Cowdenbeath) (Lab)
Fee, Mary (West Scotland) (Lab)
Ferguson, Patricia (Glasgow Maryhill and Springburn) (Lab)
Fergusson, Alex (Galloway and West Dumfries) (Con)
Findlay, Neil (Lothian) (Lab)
Fraser, Murdo (Mid Scotland and Fife) (Con)
Goldie, Annabel (West Scotland) (Con)
Grant, Rhoda (Highlands and Islands) (Lab)
Gray, Iain (East Lothian) (Lab)
Griffin, Mark (Central Scotland) (Lab)
Henry, Hugh (Renfrewshire South) (Lab)
Hume, Jim (South Scotland) (LD)
Johnstone, Alex (North East Scotland) (Con)
Kelly, James (Rutherglen) (Lab)
Macdonald, Lewis (North East Scotland) (Lab)
Macintosh, Ken (Eastwood) (Lab)
Marra, Jenny (North East Scotland) (Lab)
Martin, Paul (Glasgow Provan) (Lab)
McArthur, Liam (Orkney Islands) (LD)
McCulloch, Margaret (Central Scotland) (Lab)
McDougall, Margaret (West Scotland) (Lab)
McGrigor, Jamie (Highlands and Islands) (Con)
McInnes, Alison (North East Scotland) (LD)
McMahon, Michael (Uddingston and Bellshill) (Lab)
McMahon, Siobhan (Central Scotland) (Lab)
McNeil, Duncan (Greenock and Inverclyde) (Lab)
McTaggart, Anne (Glasgow) (Lab)
Milne, Nanette (North East Scotland) (Con)
Mitchell, Margaret (Central Scotland) (Con)
Murray, Elaine (Dumfriesshire) (Lab)
Pearson, Graeme (South Scotland) (Lab)
Pentland, John (Motherwell and Wishaw) (Lab)
Rennie, Willie (Mid Scotland and Fife) (LD)
Scanlon, Mary (Highlands and Islands) (Con)
Scott, Tavish (Shetland Islands) (LD)
Smith, Drew (Glasgow) (Lab)
Smith, Liz (Mid Scotland and Fife) (Con)
Against
Adam, George (Paisley) (SNP)
Adamson, Clare (Central Scotland) (SNP)
Allan, Dr Alasdair (Na h-Eileanan an Iar) (SNP)
Allard, Christian (North East Scotland) (SNP)
Beattie, Colin (Midlothian North and Musselburgh) (SNP)
Biagi, Marco (Edinburgh Central) (SNP)
Brodie, Chic (South Scotland) (SNP)
Brown, Keith (Clackmannanshire and Dunblane) (SNP)
Burgess, Margaret (Cunninghame South) (SNP)
Campbell, Aileen (Clydesdale) (SNP)
Campbell, Roderick (North East Fife) (SNP)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Constance, Angela (Almond Valley) (SNP)
Crawford, Bruce (Stirling) (SNP)
Cunningham, Roseanna (Perthshire South and Kinross-shire) (SNP)
Dey, Graeme (Angus South) (SNP)
Don, Nigel (Angus North and Mearns) (SNP)
Doris, Bob (Glasgow) (SNP)
Dornan, James (Glasgow Cathcart) (SNP)
Eadie, Jim (Edinburgh Southern) (SNP)
Ewing, Annabelle (Mid Scotland and Fife) (SNP)
Ewing, Fergus (Inverness and Nairn) (SNP)
Fabiani, Linda (East Kilbride) (SNP)
Finnie, John (Highlands and Islands) (Ind)
FitzPatrick, Joe (Dundee City West) (SNP)
Gibson, Kenneth (Cunninghame North) (SNP)
Gibson, Rob (Caithness, Sutherland and Ross) (SNP)
Grahame, Christine (Midlothian South, Tweeddale and Lauderdale) (SNP)
Harvie, Patrick (Glasgow) (Green)
Hepburn, Jamie (Cumbernauld and Kilsyth) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Johnstone, Alison (Lothian) (Green)
Keir, Colin (Edinburgh Western) (SNP)
Kidd, Bill (Glasgow Anniesland) (SNP)
Lyle, Richard (Central Scotland) (SNP)
MacAskill, Kenny (Edinburgh Eastern) (SNP)
MacDonald, Angus (Falkirk East) (SNP)
MacDonald, Gordon (Edinburgh Pentlands) (SNP)
Mackay, Derek (Renfrewshire North and West) (SNP)
MacKenzie, Mike (Highlands and Islands) (SNP)
Malik, Hanzala (Glasgow) (Lab)
Mason, John (Glasgow Shettleston) (SNP)
Matheson, Michael (Falkirk West) (SNP)
Maxwell, Stewart (West Scotland) (SNP)
McAlpine, Joan (South Scotland) (SNP)
McDonald, Mark (Aberdeen Donside) (SNP)
McKelvie, Christina (Hamilton, Larkhall and Stonehouse) (SNP)
McLeod, Aileen (South Scotland) (SNP)
McLeod, Fiona (Strathkelvin and Bearsden) (SNP)
McMillan, Stuart (West Scotland) (SNP)
Neil, Alex (Airdrie and Shotts) (SNP)
Paterson, Gil (Clydebank and Milngavie) (SNP)
Robertson, Dennis (Aberdeenshire West) (SNP)
Robison, Shona (Dundee City East) (SNP)
Russell, Michael (Argyll and Bute) (SNP)
Salmond, Alex (Aberdeenshire East) (SNP)
Stevenson, Stewart (Banffshire and Buchan Coast) (SNP)
Stewart, Kevin (Aberdeen Central) (SNP)
Sturgeon, Nicola (Glasgow Southside) (SNP)
Swinney, John (Perthshire North) (SNP)
Thompson, Dave (Skye, Lochaber and Badenoch) (SNP)
Torrance, David (Kirkcaldy) (SNP)
Urquhart, Jean (Highlands and Islands) (Ind)
Watt, Maureen (Aberdeen South and North Kincardine) (SNP)
Wheelhouse, Paul (South Scotland) (SNP)
White, Sandra (Glasgow Kelvin) (SNP)
Wilson, John (Central Scotland) (SNP)
The result of the division is: For 49, Against 67, Abstentions 0.
Amendment 26 disagreed to.
Section 56—Linked transactions
Amendment 27 moved—[John Swinney]—and agreed to.
Section 67—Subordinate legislation
Amendment 72 not moved.
Amendments 28 and 29 moved—[John Swinney]—and agreed to.
Amendment 30 moved—[Gavin Brown]—and agreed to.
Amendment 31 moved—[John Swinney]—and agreed to.
Amendment 73 not moved.
Amendment 32 moved—[John Swinney]—and agreed to.
Amendment 33 moved—[Gavin Brown]—and agreed to.
Section 69—Commencement
Group 11 is on Crown application. Amendment 34, in the name of the cabinet secretary, is the only amendment in the group.
Amendment 34 is a minor amendment that will ensure that section 68, which relates to the application of the bill to the Crown, will come into force on the day that the bill receives royal assent. The amendment adds a reference to section 68 into section 69(1).
I move amendment 34.
Amendment 34 agreed to.
Schedule 1—Exempt transactions
Amendment 35 moved—[John Swinney]—and agreed to.
Schedule 2—Chargeable consideration
Amendment 36 moved—[John Swinney]—and agreed to.
Schedule 5—Multiple dwellings relief
Amendments 37 to 40 moved—[John Swinney]—and agreed to.
Schedule 8—Relief for alternative finance investment bonds
Amendments 41 and 42 moved—[John Swinney]—and agreed to.
Schedule 13—Charities relief
Amendment 43 moved—[John Swinney]—and agreed to.
After Schedule 16
Amendment 74 not moved.
Schedule 17—Partnerships
Amendments 45 and 46 moved—[John Swinney]—and agreed to.
Schedule 18A—Leases
Amendments 47 to 66 moved—[John Swinney]—and agreed to.
Schedule 19—Index of defined expressions
Amendments 67 and 68 moved—[John Swinney]—and agreed to.
On a point of order, Presiding Officer. I am not sure whether you called amendment 44. Has it been called?
Thank you for your point of order. My script is not all that it might be, but if we are all agreed, we could say that we called amendment 44. [Laughter.] We should have dealt with it, so thank you for drawing it to our attention. Do we agree that amendment 44 has been moved and agreed to?
Members indicated agreement.
That ends consideration of amendments. My thanks for your forbearance.