Taxing Second Homes is welcome, but they should be taxed locally

The Scottish Greens are proposing to add an amendment to the Housing Bill that would allow the Additional Dwelling Supplement (the extra tax paid if someone buys a second home in Scotland, currently 8% of the property’s value) to be increased in areas where there is a particularly acute housing shortage - especially in areas where that shortage is driven by excessive levels of second home ownership.

There are currently around 21,600 second homes in Scotland (for comparison, there are around 43,500 long term vacant homes in Scotland and around 33,600 households assessed as homeless) and many of those second homes are particularly concentrated in areas like Argyll and Bute and Na h-Eileanan Siar. This additional levy for areas of high second home ownership would be a welcome and positive step towards increasing housing justice in these areas.

However, the Greens risk increasing the concentration of political power in Scotland by the way they are introducing this amendment. Under their proposal, it would be Scottish Ministers in Edinburgh who would have the sole power to increase or decrease both the national rate of ADS and this proposed acute housing shortage levy.

This approach flies directly in the face of the democratic principle of subsidiarity which states that all powers of governance should be controlled as locally as possible and only passed up to a regional, national or international level if a more local solution cannot be found.

In most countries in Europe, this would mean that local property taxes designed to combat particularly local problems would be controlled by a municipal council. This means that rather than Ministers deciding that Portree had too many second homes, the people of Portree would be the ones to make that decision, would set the levy, and would benefit from any revenue that came in as a result of the tax.

Unfortunately, Scotland - almost unique among European nations - does not have a system of municipal councils so the next best step would be to grant this power to Local Authorities rather than to Scottish Ministers.

But that should be considered only a stopgap measure. Common Weal has published a blueprint on how to restore local democracy to Scotland via a system of municipal-level Development Councils, democratically elected and overseen by local Citizens’ Assemblies. These councils would have the ability to “pull down” tax powers from Local Authorities (renamed Regional Authorities under our scheme) as and when they see fit. This could include towns in Argyll and Bute “pulling down” the power to control this proposed ADS supplement when they wish to deal with a local housing shortage without having to wait for Scottish Ministers to notice the problem from Edinburgh.