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Would a property tax affect property prices?

As the debate regarding the replacement of the council tax system with a property tax system goes on, there is growing anger and concern that any such move could have a dramatic impact on the cost of property in Scotland. While it has to be appreciated that the many parties discussing the options are looking from different points of view, the SNP has forecast that if a property tax was introduced to Scotland we could see property prices fall by 15% which equates to an average £22,000 reduction.

There is no doubt that we would see reduced demand for more expensive properties in the UK if the property tax was introduced, although to what extent it would impact upon prices is anybody's guess at this moment in time. Many people believe that the one true reason for the introduction of a property tax system in Scotland is to reduce the likelihood of the Scottish Executive continuing to receive its annual council tax rebate, which would make up the potential £400 million budget short fall. If this is the case, this is a major gamble by the UK government and one which could backfire at the next general election.

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