Stamp Duty - The Tory's plan

WTF?_2

Gorgeous_George wrote: »

What is Stamp Duty supposed to be for?

It serves the same purpose as any tax - to take money from your pocket and put it into the hands of the government.

In order to stop the public getting disaffected with being taxed up to their armpits, there needs to be lots of different taxes in order to give the impression that the tax being levied serves some useful purpose in relation to the item that is being taxed.

beingjdc

Gorgeous_George wrote: »

What is Stamp Duty supposed to be for?

If the money needs to be raised it should be added to Council Tax

Why should those of us locked into renting because of ridiculous house prices driven by speculation be forced to pay more tax to subsidise people who buy and sell houses instead of producing something?

I like using my mobile phone, so I think all VAT on mobile phone bills should be put on income tax instead, how about that?

Gorgeous_George

beingjdc wrote: »

Why should those of us locked into renting because of ridiculous house prices driven by speculation be forced to pay more tax to subsidise people who buy and sell houses instead of producing something?

I like using my mobile phone, so I think all VAT on mobile phone bills should be put on income tax instead, how about that?

That doesn't really add to the argument.

Why should a homeowner pay a bill that a tenant doesn't have to pay?

Why should someone whose job makes him move 100 miles incur a cost that a tenant moving for the same reasons doesn't?

GG

Guy_Montag

Property taxes are one of the hardest to avoid - check out Osborne offering to allow non-doms to buy there way out of paying the tax they should.

beingjdc

Gorgeous_George wrote: »

That doesn't really add to the argument.

Why should a homeowner pay a bill that a tenant doesn't have to pay?

Why should someone whose job makes him move 100 miles incur a cost that a tenant moving for the same reasons doesn't?

Because;

1) Taxes should be related to ability to pay, and if you can afford to be buying a house, you should (in a world where the banks haven't gone mad) have more money than someone who is renting.

2) Buying is a choice, you gain the value of an asset that (usually, in the long run) increases in value. In exchange you tie up some of your capital, and lose the flexibility to move at short notice. Renting is less of a choice (for most people) because everyone has to live somewhere, even those who can't buy.

I'll swap you - no stamp duty, but capital gains tax if the value of your home has gone up when you sell it. No, thought not - I pay tax on my savings, what do mortgage holders pay on their equity?

Gorgeous_George

That's more like it.

beingjdc wrote: »

Because;

1) Taxes should be related to ability to pay, and if you can afford to be buying a house, you should (in a world where the banks haven't gone mad) have more money than someone who is renting.

The need to move house has no relationship to ability to pay. That's where income tax works well.

beingjdc wrote: »

2) Buying is a choice, you gain the value of an asset that (usually, in the long run) increases in value. In exchange you tie up some of your capital, and lose the flexibility to move at short notice. Renting is less of a choice (for most people) because everyone has to live somewhere, even those who can't buy.

Prices can also go down. Stamp Duty isn't dependant on a rising market.

beingjdc wrote: »

I'll swap you - no stamp duty, but capital gains tax if the value of your home has gone up when you sell it. No, thought not - I pay tax on my savings, what do mortgage holders pay on their equity?

Price rises are not why I bought and are purely incidental. CGT would result in nobody ever moving - ever.

beingjdc wrote: »

I pay tax on my savings, what do mortgage holders pay on their equity?

Nothing because, unless they trade down or sell, there is no gain - it is spent on their next home.

Still no reason why a tax should be levied on homeowners. Why not add VAT to rent? Same argument.

GG

Guy_Montag

CGT on selling is a bad idea, it would just discourage people from selling. I still say that property tax is a fair tax - by footprint adjusted for area & permitted use. One large payment when you buy (like stamp duty) followed by annual payments - akin to council tax. No way to avoid it & it discourages speculation in property.

beingjdc

Gorgeous_George wrote: »

The need to move house has no relationship to ability to pay.

But stamp duty isn't a tax on the need to move house, it's a tax on the ability to do so (and the prior decision to own rather than rent).

Prices can also go down. Stamp Duty isn't dependant on a rising market.

They can indeed, but be careful, some people want threads saying that banned. Stamp duty isn't entirely dependent on a rising market, but certainly far more people will pay it in a rising market than a falling one, given it's set at nominal price bands.

Price rises are not why I bought and are purely incidental. CGT would result in nobody ever moving - ever.

Or in prices rises moderating. I'm not saying it's a good idea, I'm saying that the absence of CGT is a big tax break for homeowners compared to other asset classes, and in comparison a 1% one-off tax is pretty minor.

SquatNow

Any reduction in taxation will simply be added to the price of the property.

Land prices rise to absorbe all available money.

Swap the "purchase" tax for an "annual" tax and the whole house price bubble problem goes away. Tax all land, every flat, factory, forest and field at 3% a year and scrap every other tax. Booming economy, zero HPI.

michaels

SquatNow wrote: »

Any reduction in taxation will simply be added to the price of the property.

Land prices rise to absorbe all available money.

Swap the "purchase" tax for an "annual" tax and the whole house price bubble problem goes away. Tax all land, every flat, factory, forest and field at 3% a year and scrap every other tax. Booming economy, zero HPI.

I find myself agreeing with your first comment and partially with the second. Demand for housing is very inelastic, everyone has to have some where to live whether rented or owned. Supply is highly constrained which increases the chances that the cost of housing will increase with incomes oon a one for one basis (cf America where supply does increase) And mortgage payments consist of interest which equates to rent and capital which equates to an investment with a return depending on hpi which makes it a highly leveraged investment that if it were another asset would be deemed unsuitable for non-specialist investors. Those who rent now and complain they can't afford to buy will be the smug 'no negative equityers' when the cycle turns.

Not sure about the Marxist conclusion that tax should only be on property tho - wouldn't this discourage people from investing in this asset at the expense of any other (flash cars, plasma tvs, charlie)? Would that really improve society?

Why would paying 25k cgt discourage someone from moving more than paying 25k stamp duty? Surely it is fairer to tax a proportion of a gain than to charge a transaction duty regardless of whether the asset has gained or fallen in value?