Chamber and committees

Your point about the concerns is well made, and I know that those concerns are shared by many people, notwithstanding the positive impacts that holiday lets can have. There is clearly a risk that, if critical mass is reached, it can undermine the density of population that is required to sustain a community.

One of the issues that were much explored during the passage of NPF4 was the applicability of local living and 20-minute neighbourhoods in a rural context. That presents challenges and requires a bespoke response, but those challenges are exacerbated in a situation in which there are vacant properties.

The points are well made and, although it is not a solution in itself, tax policy, whether it be through LBTT or enhancing the powers that are available to local government through council tax, is important in addressing that.

On local authorities, as I touched on earlier, we are giving careful consideration to the issues that have been raised through the ADS review and, as I have conveyed to the committee, I will be in a position to set out our response in several weeks’ time.

More broadly, I reiterate my point that there is a role for the private rented sector to play. However, as we have touched on, a number of factors determine the supply of housing. Many of those are microeconomic factors outwith the control of this Parliament or, indeed, any single Government, whether that be as a consequence of the challenges that we face in the supply chain, the inflated costs of raw materials, issues around recruitment and retention in the construction sector, the availability of financial products following the mini-budget or rising interest rates. All those come to bear and have an impact.

It is important to recognise that the role of tax in shaping supply and demand in housing cannot be seen in isolation; it sits in a much broader set of factors. I would suggest that those factors, when combined, are significantly more impactful.

We make our tax policy decisions through the medium of our framework for tax, which we have discussed previously before the committee. That recognises a number of functions of tax. Yes, it is about raising revenue, economic stimulus, behavioural change and redistribution. We seek to implement tax policy changes in a way that is consistent with the six principles that we have set out—the four Adam Smith principles plus effectiveness and engagement. That is to contribute towards meeting our four strategic objectives: maintaining stability of revenues, responding to societal shift, national outcomes, and a wellbeing economy. That is the process by which we take all our decisions on tax.

We had stability with the rates within the LBTT system for a number of years. There was an increase in the nil threshold in response to the pandemic, but the position subsequently reverted to the previous position. The decision that we have taken on the additional dwelling supplement is consistent with the long-standing policy intent, which I have already stated to the convener.

On what the impact will be, the SFC has provided forecasts. In looking at the net impact on the budget in each year forecast to 2027-28, we see a net increase of £256 million next year, £219 million the following year, £190 million, £175 million and £165 million. That is additional revenue that we will have because we have taken policy decisions on thresholds for our core LBTT across residential and non-residential, and because of what we are doing with the ADS. That will provide funding to help us to meet a range of objectives, including our strategic housing investment to support the social rented sector as part of the wellbeing economy.

The policy cannot be seen simply in isolation. There is revenue raising, as well, and that revenue will ultimately be deployed in support of local services and our housing programme.

As part of any tax policy, we consider what the behavioural impacts will be with regard to revenue and, as I set out in relation to the framework for tax, how it relates to our wider objectives as a Government. Obviously, it is important to recognise that we are talking about a transactional tax. It does not impact on the existing PRS. Exemptions are in place—

It is clear that there will be a number of factors at play; to suggest that the sole factor is a policy decision to increase the ADS from 4 per cent to 6 per cent is not credible. A range of factors impact on the supply of housing and the majority of those, which have the most significant impact, are outwith our collective control.

We consider our policy decisions in the round. There are several factors that determine the supply and availability of housing. To suggest that the sole factor will be the ADS is simply not credible.

I am not familiar that the statement that the university issued or the broader context, so I cannot comment on that. However, we are talking about a transactional tax that does not impact on existing properties; it is about future acquisitions. Furthermore, as Ewen Cameron-Nielsen set out earlier, there are provisions in place to support the private rented sector when six or more properties are acquired in a single transaction.

Not at all. I have listened carefully and sought to respond to those views in context. I welcome all stakeholders’ views, and the time that they take to share them and their expertise with the Parliament. In the Government, we have to take a balanced set of decisions. The consequence of not taking the decision on the ADS would be less revenue at a time when we are facing significant challenges across the public sector. We have to take decisions in the round, which is the approach that we have taken on LBTT, as with all our tax decisions. They are consistent with the policies, principles and objectives that are set out in our framework for tax.

The SFC has forecast that we will continue to see significant revenue being raised by the additional dwelling supplement. Activity in the property market from those who are liable to pay the additional dwelling supplement is forecast to take place next year and in successive years. From 2025-26, there is a forecast for growth in the ADS. The decision to increase the tax must be considered in the broader context of the forecast growth in LBTT overall and the forecast growth in the ADS, specifically, over the five-year period.

The policy is supporting the raising of vital revenue, which provides a range of services and supports for our communities. That revenue is part of ensuring that Scottish students do not have to rack up £9,000 a year in tuition fees. That is the reality of the decisions that we take to ensure that we can maintain our social contract. We do that by having a progressive tax system. Those progressive values are reflected in what we do in relation to LBTT. That tax is working because it is delivering additional revenue above and beyond the block grant adjustment, which allows us in Scotland to offer a broader range of services and support than would otherwise be available.