Is there an award for economically illiterate ideas?

westernpromise

It's not a tax on properties. It's a tax on transactions. The tax on buying your house is higher than that on alcohol, petrol or tobacco, so buying houses is obviously a great evil.

SouthLondonUser

You're right. I should have clarified "taxes on property and on property transactions".
The point still stands, however. Stamp duty on properties has generated between £5ish and £10ish bn a year for the last 10 years. You can find all the details on the official government website: https://www.gov.uk/government/statistics/uk-stamp-tax-statistics

What do you propose to do without that money? Borrow more? Tax something else? Cut some social services (which ones)?

Also, why do you say the tax on buying a house is higher than that on alchool, petrol or tobacco? VAT alone is higher than stamp duty (I mean the %, of course). Plus I believe there are a number of other duties and taxes on the products you mentioned, of which I cannot be bothered to look up the details right now.

Jonbvn

HAMISH_MCTAVISH wrote: »

Yes.

And this year's winner is.....

Brexit!

Someone change the record. It keeps jumping;)

westernpromise

SouthLondonUser wrote: »

You're right. I should have clarified "taxes on property and on property transactions".
The point still stands, however. Stamp duty on properties has generated between £5ish and £10ish bn a year for the last 10 years. You can find all the details on the official government website: https://www.gov.uk/government/statistics/uk-stamp-tax-statistics

What do you propose to do without that money? Borrow more? Tax something else? Cut some social services (which ones)?

Also, why do you say the tax on buying a house is higher than that on alchool, petrol or tobacco? VAT alone is higher than stamp duty (I mean the %, of course). Plus I believe there are a number of other duties and taxes on the products you mentioned, of which I cannot be bothered to look up the details right now.

As the tax is on the transaction, not on the house, you add the tax onto the transaction costs to establish the true level of the tax.

To buy a £1 million property in London today would cost about £2,000 to £3,000 in transaction costs - conveyancing, searches, survey, moving costs, etc - and £40,000 in stamp duty. That's a tax of about 1,400 per cent on the actual £3,000 transaction.

You can't, as the state by sleight of hand would like, argue that it's "only" £40k on a £1 million property and is hence 4%, because the property is not taxed. There is no £40k charge levied against that property just for being there. The tax explicitly arises when there is a transaction and therefore should be considered as an impost on top of the price of the transaction.

martinsurrey

westernpromise wrote: »

As the tax is on the transaction, not on the house, you add the tax onto the transaction costs to establish the true level of the tax.

To buy a £1 million property in London today would cost about £2,000 to £3,000 in transaction costs - conveyancing, searches, survey, moving costs, etc - and £40,000 in stamp duty. That's a tax of about 1,400 per cent on the actual £3,000 transaction.

You can't, as the state by sleight of hand would like, argue that it's "only" £40k on a £1 million property and is hence 4%, because the property is not taxed. There is no £40k charge levied against that property just for being there. The tax explicitly arises when there is a transaction and therefore should be considered as an impost on top of the price of the transaction.

can you let me buy your house since you dont count the purchase price as a cost to the seller?

whats the rate of VAT on a car in your world? no transaction costs, £30k for the car (but that doesn't count as its not the car that's taxed its the transaction), £6k VAT, infinite tax rate?

makes the house rate seem reasonable.

kabayiri

HAMISH_MCTAVISH wrote: »

Yes.

And this year's winner is.....

Brexit!

Alas, Brexit was pipped at the post by 2 late runners coming up on the rails ...

Euro : a horse which promised much but which is in danger of being put out to pasture.

Refugee : a compassionate loving horse, which has no idea which direction it is going in, or how much this will cost the punters.

westernpromise

martinsurrey wrote: »

can you let me buy your house since you dont count the purchase price as a cost to the seller?

whats the rate of VAT on a car in your world? no transaction costs, £30k for the car (but that doesn't count as its not the car that's taxed its the transaction), £6k VAT, infinite tax rate?

makes the house rate seem reasonable.

No. Follow the money. The dealer charges you nil for the transaction itself. He charges you for the car. The state does not then charge you a percentage of the car's value to recognise the change of ownership from his to yours. It charges about £80 or something to register it to you with DVLA. So the transaction charges total £80. They may occur at other times than when there is a transaction; eg, if you give the car to a spouse, or change the plate. So the transaction costs are not necessarily transactional.

When you buy a house the seller charges you £x for the house but your transaction costs include conveyancing, etc. The transaction costs are all about ensuring recognition of your title to the house; that is what the actual transaction is. For recognising this transaction, the state does add a charge. It does not provide you with the house. It does not levy stamp duty on the house other than when there is a transaction.

There is thus no ad valorem state charge for recognising the car transaction, but a colossal state charge for recognising the house transaction.

Apart from that your analogy is spot on.

westernpromise

SouthLondonUser wrote: »

What do you propose to do without that money? Borrow more? Tax something else? Cut some social services (which ones)?

Reduce the rate of stamp duty by 75% and quadruple the number of transactions. Tax neutral.

SouthLondonUser

westernpromise wrote: »

Reduce the rate of stamp duty by 75% and quadruple the number of transactions. Tax neutral.

I am sure your crystal ball is better than mine, but will you forgive me if I am pedantic enough to ask why you believe a 75% reduction in stamp duty will quadruple the number of transactions?

westernpromise wrote: »

You can't, as the state by sleight of hand would like, argue that it's "only" £40k on a £1 million property and is hence 4%, because the property is not taxed. There is no £40k charge levied against that property just for being there. The tax explicitly arises when there is a transaction and therefore should be considered as an impost on top of the price of the transaction.

:eek:

martinsurrey

westernpromise wrote: »

No. Follow the money. The dealer charges you nil for the transaction itself. He charges you for the car. The state does not then charge you a percentage of the car's value to recognise the change of ownership from his to yours. It charges about £80 or something to register it to you with DVLA. So the transaction charges total £80. They may occur at other times than when there is a transaction; eg, if you give the car to a spouse, or change the plate. So the transaction costs are not necessarily transactional.

When you buy a house the seller charges you £x for the house but your transaction costs include conveyancing, etc. The transaction costs are all about ensuring recognition of your title to the house; that is what the actual transaction is. For recognising this transaction, the state does add a charge. It does not provide you with the house. It does not levy stamp duty on the house other than when there is a transaction.

There is thus no ad valorem state charge for recognising the car transaction, but a colossal state charge for recognising the house transaction.

Apart from that your analogy is spot on.

you are mixing a lot of different things here along with a misunderstanding of tax.

VAT is by definition an ad valorem transaction charge, its charged to you, but collected by the dealer on behalf of HMRC and IS a percentage of the value of the car (20%).

SDLT payment is NOT a requirement for the registration of land, you could buy land, register it in your name with the land registry , and NOT pay the SDLT, you would get sued and fined, but you would still own the land.

They are pretty much identical, but you seem to want to treat them all differently.