Over the years, academic economists have argued that Council tax And stamp duty Are deeply flawed. Politicians of all corners, as well as various thinktanks also agree. Back in 1976, the UK also had a royal commission that recommended radical reforms, but was never implemented.
But now the UK government is called Keeping in mind the change in stamp duty So that it is paid only on homes selling for more than £ 500,000. This may be big news, especially since it will be paid by vendors instead of buyers. Due to high House pricesThis will happen London and southeast killed people,
Stamp duty is one of the oldest taxes in Britain, introduced in 1694, but its rules and rates have changed over time.
Especially since 2010, the rates have increased and a series of complex discounts (for the first time for buyers, for example), “holidays” and high rates have come and gone to other homes. Scotland and Wales now have their own systems.
Stimulating these changes and outside has increased cyclic ups and downs in the housing markets. For example, when a low stamp duty rate (introduced in 2022) was phased after three years, the prices of the house slipped.
But the main problem with stamp duty is that it is a tax on buying and selling a house – so when moving forward. This is a barrier for both for the old and both for the growing family. For example, it proceeds to use the UK’s rare housing stock more efficiently.
It can also serve as a hindrance to people’s adjustment (and therefore damage productivity growth) by disrupting people’s ability to move to better jobs. A 2017 study concluded that the increase in two percent point stamp duty has decreased by 37 percent. This decrease in mobility, however, seems to be limited to small distance movements mainly.
Paying stamp duty makes it more difficult for people to find their taste -friendly homes. Low impact on long distance movements (usually associated with labor market adjustment), however, does not provide much comfort.
The same study of 2017 found that the treasury derived from a stamp duty increase for each £ 100 in revenue, given an additional cost and problems in finding a suitable house, will require homes to keep them at the same level of goodness.
Get a free partial stock for up to £ 100.
Capital at risk.
terms and Conditions apply.
Advertisement
Get a free partial stock for up to £ 100.
Capital at risk.
terms and Conditions apply.
Advertisement
Stamp duty is a progressive tax – the more rich you are, the more you are likely to pay because it is related to the price of the house. But the relationship is complex, with the total discount if the price of the house is less than £ 125,000. It increases to 12 percent for all prices above £ 1.5 million.
It first adds another discount for buyers and a premium for other home buyers. In fact, since the regional variation in home prices is much higher than the regional variation in income, the stamp duty is super-progressive and punishes those living in London and southeast.
In September 2024, the price of the middle house in London was £ 525,000, in the cheapest area, 3.3 times in the north-east. But London’s average earnings were only 1.4 times in the north-east.
Why is stamp duty still present?
For governments, the attractive aspect of stamp duty is that it is cheap and easy to collect. And, like any property tax, it is difficult to avoid it. It may also be a case that it is a politically easy to do compared to the council tax. This is because it is considered avoidable or voluntary.
If you do not want to pay it, you can’t just buy a house. After all, it is a buyer who is responsible for paying it. But of course, it may not be really so simple. The tax burden will actually be divided between buyers and vendors – and all have to live somewhere, so the fare will still reflect an element of stamp duty paid by the landlords.
A good government agenda with a long -term approach must definitely improve stamp duty. But the clear focus on stamp duty is the result of the government’s commitment to not increase taxes on “working people”.
Seriously, in combination, there is a huge case for the complete idea of stamp duty and council tax. A strategic vision will add our system of local government finance to that agenda. Many think councils are much worse than tax stamp duty. This is the product of another crisis: in the early 1990s, after the collapse of the Thaccher government’s pole tax, anything – anything – was required to be inserted.
This would be a tragedy if the UK had to gain a crowd, short -term change for stamp duty in a bid to increase revenue in an emergency, rather than that we address serious, long -term problems of taxing tax and tax on the local government. If the stamp duty changes, it should not be in danger to such real, long -term and valuable improvements.
Paul Cheshire is an Emeritus of Economic Geography at London School of Economics and Political Science
The article was originally published by the conversation and was reinstated under a creative Commons license. read the Original article
