This is how a land tax could work in Scotland

Scotland’s land ownership is concentrated with around 433 landowners privately owning around half the land.

In comparison, less than 3% of Scotland is owned by the communities who live on the actual land.

READ MORE: Watch our live council tax discussion with Common Weal's Craig Dalzell

To rebalance Scotland’s land ownership, a tax is seen as a way to better distribute wealth and benefit the communities which are resident on the land.

Scotland’s current council tax taxes only buildings and not land itself.

How would a land tax work in Scotland?

A land tax sounds simple: it would be a tax based on the market value of the land and any developments on it.

It would be arguably easier to calculate compared to others, and can be done by assessing the land and comparing it so surrounding areas, as well as previous sales figures and market trend adjustments.

For example, Denmark has a land value tax set at 1.6% and 3.4% of the land value, although agricultural land has a discount of 1.48%, so it is taxed at rates between 0.12% and 0.72% of rated value.

A Scottish land tax would not account for any use of the land and would not in turn give any incentive for landowners to use land in a way which would benefit local communities.

Critics, however, argue that land does not go on sale regularly enough to gauge accurate valuation, and the implementation of such accurate valuations could take decades.

READ MORE: How a land value tax system offers a real alternative

However, the tax could be introduced alongside tighter regulations and split reforms to incentivise land improvements.

Whether it be coupled with carbon emissions land tax or a reformed version of Council Tax, it would also aim to close the loophole of land and inheritance tax.

Currently, most landowners hold land in a family trust which is not inherited but instead provides income only to the family themselves, therefore allowing for a large amount of inheritance tax to be avoided.

How much money could a land tax actually bring into Scotland?

According to a report compiled by think tank Common Weal, the country could raise more than £400 million every year if it taxed land in the same way as it taxes housing.

Reform of the Council Tax system into separate property and land taxes could also benefit rural councils and would be “substantial enough to significantly narrow or even completely close upcoming projected budget shortfalls”, the paper said.

In one example, Highland Council was projected to receive almost £97m per year through a land tax – which is almost double the local authority’s current projected budget shortfall.

How could the Scottish Government introduce a land tax?

The  2016 Land Reform Act, passed amid calls for more radical action, was described as a foundation for further actions on land reform – including on taxation.

Land reform legislation aiming to change how land is owned and managed in rural and island communities was introduced in the Scottish Parliament back in March.

The proposed bill includes measures that will apply to large landholdings of more than 3000 hectares and prohibits certain sales until government ministers can consider the impact on local communities.

READ MORE: Lack of local tax reform 'one of Holyrood's biggest failures'

The legislation aimed to help empower communities with more opportunities to own land by introducing advance notice of certain sales from large landholdings.

However, there have been calls for more urgency and ambition regarding the Land Reform Bill from campaigners with the introduction of a land tax.

The Common Weal paper noted that while the devolution settlement prevents the Scottish Government from introducing a national land tax, it “explicitly allows them to enable local authorities to manage their own”.

As with the present council tax, local authorities could have power to introduce discounts and exemptions for certain groups like crofters or in community ownership scenarios.