³ÉÈË¿ìÊÖ

Yes. The policy intent is to support first-time buyers. The example that you gave illustrates the impact that the change would have. Somebody who was buying a second property as buy to let at, to use the example that you gave, £100,000 would be liable for the ADS whereas a first-time buyer or a home mover who is not eligible for the ADS would not be required to pay any LBTT because they are under the threshold. As I said, for first-time buyers, it is up to £175,000.

Forgive me, but much of what you have touched on goes beyond my portfolio responsibilities and aligns more with those of Ms Robison and Mr Harvie. However, the answer to your questions about tax and investment in the context of finance and the economy is yes. I do not want to repeat myself, but our tax policy decisions are taken in the context of the budget cycle, the policy cycle and our strategic objectives as a Government. They are not taken in isolation. We are all familiar with and understand the clear policy intent behind the ADS, which is to do with the provision of support for first-time buyers.

Are there any specific points that you want me to touch on, beyond that?

I have to concede that that is a perfectly fair and reasonable point. It had been our intention to have progressed further on the ADS review. However, given the complexity of the ADS review and the importance of being able to provide certainty and get it right, we have taken a bit more time. As I said in my remarks to the convener earlier, we will be producing a response to the review shortly. I look forward to having opportunities for further engagement with the committee on what we produce at that point.

We recognise that second and holiday homes can play an important part in local economies, but we also recognise that they can present many challenges as well, particularly around population retention and affordability. That is why we have taken this approach and why, through the joint working group that is looking at the resourcing of local government, including in relation to council tax, which was established following the Bute house agreement, we are, in conjunction with COSLA, looking at measures that can enhance local authorities’ ability to respond to such issues, including, for example, through the additional council tax supplement for second homes.

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.