Falling revenues should push chancellor to take axe to stamp duty – Phillips

Falling revenues should push chancellor to take axe to stamp duty – Phillips

 

People who have put off buying or moving home will find those decisions easier, but there is still a dark cloud threatening to rain on the parade.

With a Budget looming in a few weeks’ time on 11 March, it’s time to revisit that old chestnut, stamp duty.

I’m never quite sure why it is officially referred to as Stamp Duty Land Tax (SDLT) as it is not a tax on the value of land.

It is a transaction tax, pure and simple. And at the current rates, it is strangling the market.

If you tax apples, people will buy and sell fewer apples. If you tax property transactions, guess what: fewer people will buy or move home.

And if there are fewer transactions, the market does not clear.

As people’s circumstances change, they have more children, the children leave home, an elderly relative comes to live with them, so their housing needs change.

If you make it more difficult or significantly more expensive to move, they are more likely to stay put in housing that it is no longer right for them – but which might be perfect for someone else.

 

Falling revenues

Ironically, stamp duty revenues have also fallen. Boris Johnson knows all about cake – having it and eating it.

He should understand that a smaller slice of a bigger cake is often better than the other way round – and so it is with stamp duty.

During his successful Conservative leadership bid last summer, Boris Johnson talked about abolishing stamp duty on purchases under £500,000 and cutting the rates on higher-value properties as well.

A lot of people who are thinking about moving house soon will be watching anxiously to see what chancellor Sajid Javid does with stamp duty on 11 March, he should not let those people down.

His first Budget could be remembered as the one that takes an axe to penal levels of stamp duty and sets the property market free.