Duke Richard, the 10th Duke of Buccleuch and Queensberry, KBE

BBC Scotland’s Business and Economy Editor, Douglas Fraser, conducted a fascinating interview with John Glen, Chief Executive of the Buccleuch Group yesterday (online report here & audio file here). There is much to chew over but two aspects in particular stood out.

1. Business Tax

“These estates are businesses” Mr Glen remarks at one point. Now I have a high regard for Douglas Fraser as a journalist but I wonder if the BBC will ever follow up such an assertion by asking “so why do they not pay business rates like all other businesses?”

Of course on Buccleuch Estate there are workspaces, sawmills and a variety of other business premises and they are liable for business rates (to be paid by the occupier who is often not the owner). But the estate as a business – the 270,000 acres – pays nothing. Why in Scotland in 2012 do landowners still get away with not having to pay their fair share of property taxes?

2. Who Owns Buccleuch Estates?

On the Buccleuch Group website is the following statement.

“Buccleuch Group companies embrace the corporate business interests of the Buccleuch Family. The parent company is the Buccleuch Estates Limited, which is chaired by Duke Richard, the 10th Duke of Buccleuch and Queensberry, KBE.”

Buccleuch Estates Ltd. is in fact a parent company for a range of businesses in Germany, Luxembourg, Russia, Germany and the UK. But “embracing the corporate business interests of the Buccleuch Family” rather suggests that the company is owned by the Duke of Buccleuch and family.

The fact is, however, that the shares of Buccleuch Estates Ltd. are wholly owned by Anderson Strathern Nominees Ltd., a company with a total paid-up share value of £4, whose shareholders are four Edinburgh lawyers, whose total assets amount to £4 and which has not traded since its incorporation in May 1992.

So how, exactly are the “corporate business interests of the family” represented in the Buccleuch Group? That’s another question which the BBC might one day ask.

I think I know the answer. I learnt it years ago from one of Buccleuch’s advisors who is now safely retired. One day, when I have probed further, I may be in a position to reveal it.

12 Comments

  1. Of course, it’s not just aristocratic rural landlowners that “get away with not having to pay their fair share of property taxes” but all landowners including urban commercial property businesses who own the premises occupied by household name retailers and offices etc. The aggregate rateable value of urban commercial property vastly exceeds the agg. RV of rural farmland (inc. forestry and sporting estates etc.). Under your LVT proposals, will it be the landlord or tenant who pays?

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  2. Andy Wightman

    The landlord. LVT is a levy on proprietors.

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  3. Doesn’t that run the risk that businesses who don’t own the premises they operate from (a substantial number including household names; I’m not talking about tenant farmers here) “get away with not having to pay their fair share of property taxes”.

    It’s the occupier of property rather than its owner who derives the benefit of the local services LVT is designed to pay for, so is it not more equitable for the default rule to be that the occupier pays? That would also seem to be more consistent with “polluter pays”.

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  4. Andy Wightman

    A land tax should by definition be paid by the owner. It is they who fundamentally enjoy the benefits (legal system, police, fire, military to defend the country) as well as collecting the rent which is a reflection of the value of the property which in turn is a reflection of the value created by the community in a safe, clean, well ordered urban space. Sure, businesses can also pay local taxes but should not be based on property values but on (eg) turnover.

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  5. Depends on what the land tax is for. I thought (following the paper you wrote for the Greens and their manifesto) LVT was to fund local government but you mentioned there the legal system and defence which are obviously central government functions.

    Are you suggesting local income taxes as well as LVT to fund local govt? If so, in what proportions? Or will LVT be a central govt tax?

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  6. Andy Wightman

    Green Party paper was designed to outline how LVT could replace existing local govt finance from business rates and council tax. My point above about defence and legal system is part of a wider justification for land taxes which goes back to earl days of feudalism – those holding charters had obligations to the Crown – and reflects the kind of arguments that underpin the wider application of LVT at national level. Having said that, in most cases where LVT has been adopted it has been at a local level.

    LVT would in most cases be only one of a number of taxes that could be adopted locally but theres nothing to stop a national rate as well.

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  7. The link to feudalism is another of your jokes like the Salmond speech, right? You may want to do another warning to journalists or else I can foresee: “Wightman calls for revival of feudal tax – Under radical proposals backed by the Green Party which would see household name retailers and businesses get away with not having to pay their fair share of property taxes and part of the burden transferred to farmers and crofters …”

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  8. Andy Wightman

    Link to feudalism is not a joke. The key phrase is “goes back to”. It is about the philosophical basis for exacting levies on property. I am all for household retailers and businesses paying their fair share of tax but if they are a tenant it should not be a property tax.

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  9. In the early days of feudalism, the profits of the land were virtually the only source of wealth available to be taxed. Today there are many other sources to choose from. The fact that something was done in the 12th century because they had no choice is not an argument in favour of doing it in the 21st. LVT is likely to be a hard enough sell politcally as it is without linking it to feudalism!

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    • Feudalism has nothing to do with this – it was a passing comment. The paper for the SGP never mentions it neither do any of the key academic or policy papers. I do not argue that because something was done in the 12th century it should be done now.

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  10. I entirely agree feudalism has nothing to do with LVT. But you raised it in this context, not me, and I was so utterly mystified as to why that I genuinely thought you might be pulling my leg (esp. as it ran in parallel with the Salmond speech spoof).

    And you may not intend it but you do have a habit of making references to the distant past as if they were some golden era before being tainted by later developments such as introduction of feudalism, Division of Commonties Act 1695 etc. etc. and including these references cheek by jowl with discussion of 21st century reform such that some readers may think you just have some atavistic urge to drag us back in time. This habit tends to obscure the more sensible arguments you’re advocating.

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    • Well I am interested in history and as for the 1695 Act, there is no political discussion of it between 1695 and the SNP Govt in 2012 so one has not got much choice. On feudalism, I repeat, I said “goes back to early days” – that’s is a spread of time not a reference to a distant past.

      Reply

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