SCOTGOV plans to explore the potential for a land value tax in Scotland should “set alarm bells ringing” among the farming community, according to Scottish Conservative MSP Peter Chapman.

The Scottish Land Commission was recently instructed by the government to investigate a land value tax as part of a wider piece of research on land reform issues. Mr Chapman, who acts as shadow rural economy secretary, declared that the prospect of such a levy could be 'catastrophic' for farm incomes.

“I find it very worrying that the SNP government has decided to launch this investigation – as there is rarely any smoke without fire," said Mr Chapman,“Why would the government spend time and effort looking at what is happening in other parts of Europe if there is no intention to introduce something similar here?

“Farmers’ finances are already in a precarious state, with official figures showing the average last year was as low as £12,600 – and that includes EU subsidies," he noted. “The introduction of a land value tax would not only add another layer of complexity to the tax system, but it could be catastrophic for farm incomes.

“This decision will set alarm bells ringing among the farming industry. We have seen what happened, almost overnight, with the re-introduction of sporting rates. This is yet another example of an SNP government that doesn’t understand rural Scotland," he added.

Land agents Strutt and Parker agreed that the possibility of a land value tax should cause “deep concern” to farmers.

Partner Mary Munro said: “It is wrong to assume that land values are any indication of income or the ability to afford additional tax burdens. Those of us working in the industry know that the return to capital from farming is low, typically 2% or less. One hopes that the Scottish Land Commission investigation will acknowledge this.

“Many farming families are living very frugally and simply could not afford an annual tax that was related to the value of their land," she said. "This study will cause deep concern to many country people.

“I personally would like to see the Government looking at proposals to increase the viability of Scottish land-based food production, adopting policies to use Scottish produce in the public sector, promoting the low food miles and first-class quality of meat, vegetables and grains of Scottish provenance," added Ms Munro.