Stamp Duty - it's just a load of rubbish isn't it

N1AK

davetrousers wrote: »

OK is that what you want, house prices to soar, and why?

Because he's a troll.


Stamp duty is one of the least constructive taxes as it discourages behaviour that isn't negative (and might be positive) like moving for a better job or to support a relative.

That said, it was clearly an early attempt at a (proxy) wealth tax. It would make far more sense to charge people a yearly fee based on the value of their home but that's politically impossible (just look at how council tax valuations can't be redone).

The general issue with any tax is that to get rid of it you need to come up with a viable alternative plan that is politically viable. Given that you're probably already planning what you're going to do with duty increases, the extra tax from dropping income tax boundaries in real terms etc, this isn't easy.

Jon_B_2

ChopperST wrote: »

Stamp duty should be a tax on the sale not the purchase in my opinion.

Agree 100% and what with house prices generally always rising, it would only be a capital gains tax in different wording.

the_flying_pig

N1AK wrote: »

...Stamp duty is one of the least constructive taxes as it discourages behaviour that isn't negative (and might be positive) like moving for a better job or to support a relative.

That said, it was clearly an early attempt at a (proxy) wealth tax. It would make far more sense to charge people a yearly fee based on the value of their home but that's politically impossible (just look at how council tax valuations can't be redone).

The general issue with any tax is that to get rid of it you need to come up with a viable alternative plan that is politically viable. Given that you're probably already planning what you're going to do with duty increases, the extra tax from dropping income tax boundaries in real terms etc, this isn't easy.

you make some fair points.

stamp duty is fairly unambiguously a bad tax - it's allowed to exist because:

(a) it's much easier politically to keep a bad tax than it is to introduce a so-so tax [e.g. a mansion tax], especially if it was in the first place introduced in a discreet fashion such as through fiscal drag.

(b) as opposed to say a mansion tax or other taxes on property ownership, which would be both fairer & economically efficient [in terms of the distortion of incentives], SD has a couple of great practical advantages, namely: (i) the availability of a very precise valuation taken at a moment in time; and (ii) the fact that [given deposit requirements, earnings checks, & so on] housebuyers are invariably people who can be made to pay the tax more easily than 'asset rich, income poor' types.

antrobus

N1AK wrote: »

...Stamp duty is one of the least constructive taxes as it discourages behaviour that isn't negative (and might be positive) like moving for a better job or to support a relative....

You could say the same thing about most taxes.:)

N1AK wrote: »

..That said, it was clearly an early attempt at a (proxy) wealth tax. ...

No, it wasn't. Stamp duty was just a transaction tax. Introduced in 1694, the attraction was that it was an easy way of raising money to finance the war against France. The individual responsible for introducing stamp duty on the conveyance of land would be Spencer Perceval, who also had a war against France that needed to be paid for.

antrobus

the_flying_pig wrote: »

...(b) as opposed to say a mansion tax or other taxes on property ownership, which would be both fairer & economically efficient [in terms of the distortion of incentives],...

I suppose you could argue that Stamp Duty Land Tax (SDLT), or Land and Buildings Transaction Tax(LBTT) as they now call it in Scotland, is inherently unfair, because it only gets paid by people who actually buy a house.

Therefore it would be much fairer to replace it with a tax that everybody paid, including that 30% or so of the population who only rent their homes.

Pete9501

TheBlueHorse wrote: »

- but I can never understand why someone is taxed - and massively taxed - to buy a home to live in.

There is no need to pay tax to buy a house to live in. Tax is only due if you want a more expensive house.

Nice one bed flat here:

http://www.rightmove.co.uk/property-for-sale/property-34150029.html

Loughton_Monkey

Abolish Stamp Duty

Reintroduce tax relief on mortgage interest.

Charge VAT on rent.

.... large gin & tonics all round.... :rotfl:

PasturesNew

antrobus wrote: »

...inherently unfair, because it only gets paid by people who actually buy a house.

Therefore it would be much fairer to replace it with a tax that everybody paid, including that 30% or so of the population who only rent their homes.

While this seems a fair point on first glance, you have to factor in the fact that a lot of modern-day landlords are selling their houses more often than olden-days landlords (who'd most likely keep them for life/pass them on).

Also, the fees and the rent the tenant pays goes to the agent, who pays tax on the 10% service charge they get from the landlord and the profits from their huge fees. Then the landlord pays some income tax on the income. So, stamp duty is a random windfall, whereas taxations on the rental moving through the system is a lot of residual taxation incomes. Agents also charge VAT to landlords for their services.