S2M-3893 Council Tax Abolition and Service Tax Introduction (Scotland) Bill: Stage 1

Scottish Parliament

Wednesday 1 February 2006

[THE DEPUTY PRESIDING OFFICER opened the meeting at 14:15]

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Council Tax Abolition and Service Tax Introduction (Scotland) Bill: Stage 1

The Deputy Presiding Officer (Murray Tosh): … (the) next item of business, … is a debate on motion S2M-3893, in the name of Tommy Sheridan, on the general principles of the Council Tax Abolition and Service Tax Introduction (Scotland) Bill.

14:37

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15:54

Stewart Stevenson (Banff and Buchan) (SNP): Tommy Sheridan opened his speech by talking about justice and injustice, which is the correct context for the debate, so I will talk about whether the bill addresses that issue. As I will explain later, I welcome in particular the bill's support for family values and for marriage. I want to make it clear that the Scottish National Party unambiguously agrees with the first 21 words of the bill and to a lesser and qualified extent with lines 5 to 13 on page 4. We agree that the present system is unfair, but I will argue, as my colleagues have done, that the bill is not the solution.

I say to Tommy Sheridan that volume is no substitute for reason and analysis.

It is worth making one or two important points. Ephraim Belcher and Brian Souter will welcome the bill with open arms, because the tax that is proposed in it is entirely optional. Very few MSPs will have to pay it and no MSP who has bought parliamentary accommodation would have to pay tax on it if the bill were passed.

Let me explain. I refer in particular to the meaning of "qualifying individual", for which three tests are provided as alternatives. The first is that the person "is domiciled in Scotland". That is fair enough. The second is that the individual

"resides in Scotland (for whatever reason) for not less than 91 days (whether consecutively or otherwise)".

That would allow a person to be present for 270 days—members should speak to the Inland Revenue if they doubt me—because it is the number of periods from midnight to midnight that determine the 91 days. Thirdly, the qualifying individual would be

"the owner of heritable property in Scotland."

Section 3 qualifies that.

Here is how I would avoid the tax in total and pay not a penny. Almost all members could do this. I would transfer my house to the sole ownership of my wife—that is all I would need to do. As long as her income was below £10,000 per year, she would pay no tax on the house. I would own no house, so I would pay no tax. It is that simple. Members do not need a high-powered accountant to advise them on that; I have just completed the task for them and what I have told them is all they need to know. Members might think that there are capital gains implications in doing what I have outlined, but if one is married or in a civil partnership there would be no capital gains implications in such a transfer. Lest they think that they would lose the right to live in that house, I tell members that the Matrimonial Homes (Family Protection) (Scotland) Act 1981 preserves that right. They would hold no title or real right to such property in the land register of Scotland or the register of sasines, nor would they be the beneficiary of a trust deed conferring rights to heritable property. If one was in a legal partnership with someone who earned less than £10,000 a year, it would be quite easy to avoid paying the tax.

There is more. I direct members' attention to my register of interests, where I say voluntarily that I am the owner of some 40,000 shares in the Bank of Scotland. They can look it up, so I will tell members that they are worth £14,000 a year to me in dividend payments. Even if I did not want to change the ownership of my house, I would have only to transfer the shares to my wife and I would eliminate the taxation on them. That would be worth a £540 reduction in my taxation each and every year under the bill.

If I had £60,000 in unearned income, as many rich people do, and four kids and a wife, I could distribute my assets among them and pay no tax whatever.

Ownership of property is not as clear as one might think. For the past five years, we have been trying on behalf of the community of Longmanhill in my constituency to find the owner of a property in the village. In the past couple of months, we have tracked down the owner; it is a company in the state of Panama. It would be a bit difficult to get the money off the people in Panama.

It is interesting that there might be an effect that the SSP would welcome. If the bill were to be passed, there would be a huge advantage in renting property rather than buying it, and in transferring property into companies. Incidentally, if I were not married, I would be able to transfer my house to a company and so avoid the tax. There would be capital gains implications to that in that I would not be an individual owning a property.

Frances Curran: Will the member take an intervention?

Stewart Stevenson: It is too late.

In refusing to come before the Local Government and Transport Committee, the Inland Revenue denied us the opportunity to see the flaws in the bill.

My good friend and former boss, Sir Peter Burt—who used to be the boss of the Bank of Scotland—used to run everywhere. On one famous occasion, when he was in charge of our international division in the office in St Andrew Square, he ran down the stairs, tripped, fell, did two somersaults, landed on the floor and continued running as if nothing had happened. I must say to Tommy Sheridan that his bill is going to trip and fall, but I do not think that it is going to get up again.

16:00