The race to the bottom has begun.
No country has ever introduced “wealth redistribution” successfully. It ALWAYS ends up with the wealthy leaving, and the remaining people left have to pick up the tax tab.
Next, you get the next tier down leaving, as they can afford the taxes. And so it goes on.
The race to the bottom.
“Wealth Redistribution” is a socialist idea that looks and sounds good on paper, but it doesnt, and cannot work.
France tried it recently. The wealthy simply moved across the borders into Belgium and Spain, and took their money with them.
Estate agents Savills warns that wealthy Scots are considering moving south of the Border to avoid new Scottish Government taxes and claims the replacement for Stamp Duty may only raise half what is predicted.
Scotland is on the brink of an exodus of wealthy home owners wanting to escape the SNP’s high-tax agenda, a leading estate agent has said as it warned John Swinney’s new property tax may raise only half the amount he predicts.
Savills said “endless” numbers of its clients were considering selling up and moving south of the Border before the introduction on April 1 of Mr Swinney’s Land and Buildings Transaction Tax (LBTT), his replacement for Stamp Duty.
The firm said the wealthy think “now’s the time to get out” because the levy, which reaches 10 per cent for many middle-class homes, gives a clear signal the Nationalists will use the swathe of new tax powers coming to Holyrood to target the better-off.
But Jamie Macnab, its director of residential sales, warned the SNP agenda risks backfiring badly by triggering a “steep fall” in sales in the top and middle of the housing market that will “annihilate” Scotland’s tax revenue.
Faisal Choudhry, its associate director, calculated LBTT could raise as little as £116 million in its first year compared to the £235 million predicted by Mr Swinney.
The Scottish Finance Minister made a humiliating climb down last week by bowing to Tory demands for a five per cent band, but buyers will still pay 10 per cent of the purchase price above £325,000 and 12 per cent above £750,000. Anyone purchasing a home for at least £333,000 will pay more.
Simpson & Marwick, another estate agent, said the tax also risks damaging the Scottish economy by discouraging entrepreneurs and businesses from investing north of the Border on the grounds it is a high-tax environment.
The Telegraph has disclosed how Mr Swinney has already admitted the levy will not raise the income he originally projected, with the Deputy First Minister claiming the Chancellor is entirely responsible for cutting Stamp Duty in December.
He argued this had led to buyers bringing forward their property deals instead of waiting until LBTT is introduced, but Savills, Simpson & Marwick and Strutt & Parker agreed that the SNP “have brought this on themselves.”
Speaking after a meeting with the Tories in the Scottish Parliament, they described how there was a surge in middle-class homes going on the market immediately after Mr Swinney disclosed LBTT’s rates in October, two months before George Osborne’s Autumn Statement.
Mr Macnab said: “I had a very depressing two or three months following the announcement in October because we’ve seen endless wealthy individuals who were wanting to leave Scotland. We were asked to see their house because they didn’t like the sound of the tax.
“They were worried it might be a precursor for similarly weighted income tax down the line and thinking now’s the time to get out of Scotland. The occupiers of those high-value houses are much more mobile than the general population.”
He said that Savills, which specialises in marketing homes worth more than £500,000 had gathered a lot of anecdotal evidence that many wealthy expat Scots are reconsidering their plans to return home having made their fortune in England or abroad.
“We’ve had people who were looking for a house in Scotland who’ve now said we’re just not going to bother. We’re going to buy elsewhere,” he added.
Richard Loudon, property partner for Simpson & Marwick, warned fewer businessmen and entrepreneurs, many of whom bring large team with them, will invest in Scotland.
LBTT will also stymie labour movement within Scotland, he argued, as it will be more expensive for people to move to Aberdeen or Edinburgh.
Savills disclosed last week that the tax relies on only eight per cent of property transactions for 75 per cent of its tax take and Mr Choudhry warned: “It creates a lot of risk in the residential market in Scotland. The overall revenue could be halved if the market stalls.”
He said he had reached the £116 million figure by calculating the LBTT take if residential sales dropped to 2009 levels, at the height of the financial crisis.
Although he admitted this was a worst-case scenario, he warned it would only have to stall a relatively small number at the top end of the market for revenue to be severely hit.
House sales in Edinburgh alone will account for 30 per cent of LBTT’s overall revenue, with Aberdeen and East Renfrewshire making up another 10 per cent each. Mr Choudhry argued that raising half the tax from only three areas was putting “too much pressure” on their local property markets.
The estate agents agreed it was surprising the Scottish Government had not conducted an analysis of how LBTT tax rates would change the behaviour of buyers and sellers.
Gavin Brown, Scottish Tory finance spokesman, urged Mr Swinney to review the tax again and extend the five per cent band to a much higher price.
A Scottish Government spokesman said the LBTT rates were “driven by the principle that taxes should be proportionate to the ability to pay” and would help first-time buyers.
He added: “Indeed, Savills themselves note that Scotland is the most ‘searched for’ location on their international website outside London, citing its ‘excellent value’ compared with London and the South.”