The report – Land and property taxation in Scotland: Initial scoping of options for reform – has been written for the Scottish Land Commission by Alma Economics.

It identifies a range of ways in which taxes have the potential to help achieve long term outcomes for land reform, such as tackling inequality, expanding the supply of land for housing and reducing the amount of vacant and derelict land.

Publication of the report coincides with the setting up of a new Expert Advisory Group on Tax on Land and Property to advise the commission and shape the recommendations that it will put to ministers in late 2021. Members are experts in their field drawn from a range of backgrounds including accounting, regeneration and development, surveying, legal and economics

The report suggests that the Scottish government’s goal of inclusive economic growth has been given added urgency by the disproportionate impact of Covid-19 on the most deprived areas of Scotland.

Suggesting that well designed tax instruments could enable the Scottish government to stimulate economic recovery and pivot towards a regionally focused development model, the report’s authors highlight a number of levers that could be used to achieve land reform objectives.

Some taxes, including council tax, non-domestic rates and Land and Buildings Transaction Tax (LBTT), are already the responsibility of Scottish Parliament which also has the option of introducing new local taxes designed to fund local authority expenditures. The Scottish Land Commission is investigating these options further and will be making recommendations for tax reforms within the devolved competency in 2021.

Other taxes such as corporation tax, inheritance tax and income tax, which is partially devolved, also have the potential to influence land ownership and use, though these are reserved taxes that require action from the UK Parliament.

While 50 per cent of the UK’s wealth is tied up in land and property, it only forms around 10 per cent of the total tax base.

In Scotland, just 12 per cent of all public sector revenue across reserved and devolved taxes are raised through taxes fully or partially levied on land and property.

Lorne MacLeod, commissioner and chair of the commission’s newly established tax expert advisory group, said: “Land is our most valuable asset and we need to be willing to rethink how our tax system operates to make sure we are making the most of it for everyone.

“Taxes on land, and transactions involving land, are widely used around the world to raise revenues, reduce inequality and promote more effective land use and management.

“Taxes on land and property have the potential to stimulate behaviour change to incentivise a more productive use of land as well as disincentivising behaviour relating to land use and ownership that is not delivering wider public benefits.

“They also provide an important source of revenue to finance public services and infrastructure. Scotland will have to ensure best possible use of its resources, including land, to support the recovery.”