It’s time to slash stamp duty on houses – and then scrap it altogether
As autumn draws in, bringing a chill to the early morning air, it pays to hold on especially tight to your money. With party conference season imminent, politicians are more eager than usual for initiatives on which to spend our taxes – and distressingly short on ideas about how to limit their spending.
The Chancellor’s autumn Budget, still without an official date, is also lurking menacingly in the background. So far there have been threats of a new squeeze on the owners of second homes, calls for the removal of inheritance tax relief for Aim shares and fears of an even smaller pension annual allowance (see facing page).
Adding to the seasonal mood, this week saw the publication of a report from the Institute for Public Policy Research (IPPR), drawn up by a committee including the Archbishop of Canterbury, Justin Welby. The report called for a huge increase in inheritance tax and for higher taxes on both dividends and capital gains.
Everyone can agree that there’s room for national reform, and Brexit presents a great opportunity to think in fresh ways. But the tax-and-spend mindset glides over radical policies that can both respect your savings and make a real difference up and down the country.
As a case in point, take the absurd state of stamp duty. To its credit, the IPPR report acknowledges that “stamp duty adds undesirable friction to the property market and makes home ownership more expensive, especially for those on low incomes”. Bizarrely, it then focuses on a controversial land value tax to replace business rates, observing only that if this innovation were successful it would “provide useful lessons for the wider reform of council tax and stamp duty which are plainly necessary”.
Here’s a better idea: the Chancellor has the opportunity this autumn not to experiment with exotic new taxes or raise existing ones. He doesn’t have to wait to learn useful lessons before fixing stamp duty. All he has to do is cut it in half and unveil a plan to end it altogether in the near future.
According to a recent report by the London School of Economics (LSE) cited by the IPPR commission, in the past 20 years stamp duty has more than quadrupled on a median-priced home in England. In London it has gone up by a factor of more than 12. The same study showed how the cost of stamp duty stopped many older homeowners from downsizing – a trend that starves younger families of suitable housing stock. Stamp duty is now the second most important influence on older individuals deciding whether or not to downsize. Ten years ago, it barely registered.
With last-time buyers gridlocked, there has already been a proposal to give them a special stamp duty exemption. A YouGov study last month suggested that such an exemption could free up millions of homes for growing families.
But we don’t need further complications to stamp duty. The Telegraph Money
The Archbishop of Canterbury, the Most Rev Justin Welby, has called for higher taxes