Unearthing challenges and opportunities for land and tax justice

By Kathie Pollard, Head of Policy at the Scottish Land Commission

Tax Justice Scotland is seeking to promote a better conversation on tax policy. As such, the views expressed in this blog are those of the author and do not necessarily reflect the views of Tax Justice Scotland and its diverse supporters.

Land shapes all our lives; from the homes we live in to the places we work and the environment around us. In Scotland, it’s also one of our most valuable assets. 

Across the UK, it is estimated to be worth around £6.7 trillion – that’s more than half of the UK’s total net worth.

The way land is owned, taxed and used affects the economy at every level. It influences where homes and businesses are built, where investment flows, and who benefits from the prosperity created. It is therefore fundamental to the pursuit of tax justice. 

We know that land and property taxes can help raise revenue, influence behaviours and help stabilise land prices. However, to achieve this, we need to make it a bigger part of Scotland’s tax base. Other countries have advanced systems that help value land regularly to inform tax policies, creating options for governments to respond or use tax transparently and strategically.  

Through our ScotLand Futures initiative we heard from over 1,200 people about their priorities for land reform: how land should be owned, used and shared in the decades ahead. We heard that tax is both part of the problem and part of the solution. 

The intense pressure on land to develop, support nature and climate action, and wellbeing means that governments must carefully consider how tax can help, not hinder progress. The Scottish Government’s Tax Strategy has ambitious goals: to ensure that the tax system helps eradicate child poverty, grows the economy, tackles the climate emergency, and ensures high quality and sustainable public services. 

At the Scottish Land Commission, we work to create a fairer, more transparent and productive system of land ownership and use in Scotland. We have therefore worked with the Scottish Government to explore options for tax and fiscal interventions to support land reform and to reduce greenhouse gas emissions from land, including scoping options for a carbon land tax. The idea being that carbon emissions from land could be taxed.

In our new report, we support the principle to use tax to incentivise positive behaviour change. However, we believe we’re still a long way off from being able to design or introduce a carbon land tax. 

Peatland shows why. Damaged peat bogs are big source of emissions but, if restored, can capture emissions and lock them away. 

In principle, tax could help incentivise this shift, but we have unearthed practical challenges. These include limitations in how emissions can be measured at individual landholding level, gaps in data on the ownership and condition of land, and the need to understand how such a tax might affect different types of landowners. Research cited in our advice suggests that achieving the Scottish Government’s peatland restoration target of 250,000 hectares could depend on action from a relatively small number of landowners.

Near-term, we suggest that other legal or fiscal measures may incentivise more immediate action to help address the climate and nature crises. That said, we shouldn’t lose sight of the bigger prize. 

If the practical challenges we identify in our advice are tackled, future governments could use tax more strategically – including to support land reform and climate and nature action. 

We therefore recommend that the Scottish Government prioritises the creation of a modern tax infrastructure that brings together information on land ownership, value and use to expand future tax policy options. We will now develop a programme of work with practical steps towards achieving this goal.

After all, land is one of our most valuable assets and how we use, own and manage it is crucial to Scotland’s future.