Finance secretary John Swinney will set the first Scottish tax rates in over 300 years this week as he presents the Draft Scottish Budget 2015/16.

Incorporating new taxation and borrowing powers transferred to the Scottish Parliament through the Scotland Act 2012, the draft budget will propose a new land and buildings transaction tax - which replaces the existing UK stamp duty land tax paid when buying property over a certain value.

The finance secretary will set out the tax-free threshold below which house buyers will not need to pay any tax, currently £125,000 under the stamp duty system.

The Scottish Government said the new system north of the border would be fairer as it would be more directly related to the value of the property.

This new tax, as well as a proposed Scottish landfill tax, due to come into effect on 1 April next year.

The two devolved taxes are expected to bring in between £500m and £600m each year and Scotland’s block grant will be adjusted by a similar amount. The Scottish Government will also have the power to borrow around £300m annually to augment its capital programme.

Through Revenue Scotland, this new framework will provide a cost effective system which meets Scotland’s needs. It will also include a robust and distinctive approach to tackling tax avoidance in order to ensure that all tax that should be paid is paid.

Speaking ahead of the draft budget, finance secretary John Swinney said: “For the first time in over 300 years aspects of tax and borrowing can begin to be aligned to Scotland’s distinct needs and underpin the values of fairness and solidarity.

“These new powers give us the opportunity to reinvigorate the principles set out by Adam Smith – that taxes should be proportionate to the ability to pay, that there must be certainty, convenience for the taxpayer and efficiency of tax collection.

“And we will use new rules on tax avoidance to make sure those that should pay tax do pay tax.

“Our decision to replace the unfair and outdated system of stamp duty with a more progressive tax, more closely linked to people’s ability to afford the property they want, demonstrates the importance of having tax policy for Scotland made in Scotland.

“New taxation and borrowing powers are a step forward but I believe that the Scottish Parliament should be responsible for the full range of taxes levied in Scotland.

“It is only with full fiscal responsibility that we can build a stronger, more successful economy. It remains to be seen whether Westminster is now ready to look again at this as part of the promised increased transfer of tax powers following the independence referendum.

“Later this week I will present to Parliament a draft budget that works for everyone in Scotland – a budget to bring us together, build a better society and support those across this country who most need our help to succeed.”

The Scotland Act 2012 also introduced the Scottish Rate of Income Tax (SRIT) which will take effect from 1 April 2016. Scottish Ministers will be able to vary the rate of the SRIT, however, it will continue to be collected by HMRC.