The Scottish Land Commission was tasked with advising on how changes to existing land and property taxation could support Scotland’s economic recovery and land reform objectives.

The Commission’s recommendations make the case for ongoing reform to improve the way in which Scotland taxes land, outlining the steps needed to increase the role of land values in the nation’s tax base and support the delivery of the Scottish Government’s land policies.

While 50% of the UK’s wealth is tied up in land and property, it only forms around 10% of the total tax base. In Scotland, just 12% of all public sector revenue across reserved and devolved taxes are raised through taxes fully or partially levied on land and property.

Identifying changes to the tax system could help regenerate town centres, ensure that the move to net zero is a just transition, deliver wider benefits for local communities, and support a more diverse pattern of land ownership.

The recommendations include making information on land ownership, value and use publicly available through the introduction of a cadastral map approach – which is widely adopted across Europe and maps all land data. This would be a vital first step in strengthening the role of land in Scotland’s tax base.

The report also identifies tax as playing a key role in tackling vacant and derelict land and supporting town centre regeneration. Recommending the incentivisation of the reuse of sites by introducing additional reliefs on Non Domestic Rates (NDR) and council tax for new build properties on longstanding vacant sites and giving local authorities new powers to apply NDR to newly derelict properties to discourage them from falling into disrepair.

On the hot topic of ‘natural capital’ and the emerging carbon market, the Commission recommends that particular attention should be given to how taxation can secure “a productive balance of public and private benefit from future carbon values”. It also recommends specific consideration of the role of Land and Buildings Transaction Tax, suggesting changes could help support more diverse land ownership and address the risks to a just transition of high land values associated with carbon.

Offering income tax relief to encourage more letting of agricultural land is a final recommendation – which would require engagement on a UK basis to secure changes to what is a reserved power.

Hamish Trench, Scottish Land Commission chief executive, said: “Land is our most valuable asset and Scotland has scope to tax land in ways that better support the Scottish Government’s policy priorities, but this needs to be considered in a careful way that acknowledges the complexity and devolved powers.

“This report sets out steps that can be taken to steadily increase the role that land value plays in taxation, as well as specific reform opportunities to tackle priorities including derelict land regeneration and a just transition.

“Tax is a potentially significant influence in delivering Scotland’s land policy objectives and we recommend an ongoing programme of reforms. Discussing changes to taxation often attracts passionate debate and strong views, our international research has shown how important direct public engagement is in discussion and consideration of the options for changes in land taxation. That is why we also advise that a national conversation needs to happen to help build consensus on the options for taxing land and making the most of Scotland’s land.”

The report was developed with input from an expert advisory group who looked at the opportunities and impact of changes to new and existing taxes on land and property to support economic recovery and deliver a more productive and diverse pattern of land ownership in the long term.