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Longinthetooth

What If Stamp Duty Became Payable By The Seller?

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Stamp Duty is probably a necessary evil but is there an argument that if it were paid by the seller, not the buyer, it may assist the housing market in the long term. It would reduce the incentive to push up prices whilst potentially increasing affordability. What does the panel think?

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Why not get them both to pay it?

As far as the seller goes, you could charge at say 40% of the increase in value since purchase, as this was unearned income, or capital gains.

Now, what should we call it?

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Why not get them both to pay it?

As far as the seller goes, you could charge at say 40% of the increase in value since purchase, as this was unearned income, or capital gains.

Now, what should we call it?

and while we are at it, not allow the cost of any extension work to be offset against the profit.

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Stamp Duty is probably a necessary evil...(snip)

Why is a tax on moving house necessary?

Imagine if when you moved from one rental to another, 5K+ became due... :ph34r:

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Stamp Duty is probably a necessary evil but is there an argument that if it were paid by the seller, not the buyer, it may assist the housing market in the long term. It would reduce the incentive to push up prices whilst potentially increasing affordability. What does the panel think?

Perhaps I'm dumb, but how does having to hand over a measly 1% of the extra money stop the seller from trying to ramp up the price?

tim

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Why is a tax on moving house necessary?

Imagine if when you moved from one rental to another, 5K+ became due... :ph34r:

Please delete this post, you'll give them ideas.

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Perhaps I'm dumb, but how does having to hand over a measly 1% of the extra money stop the seller from trying to ramp up the price?

tim

In fact rather than keep the price down it would do the reverse.

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Perhaps I'm dumb, but how does having to hand over a measly 1% of the extra money stop the seller from trying to ramp up the price?

tim

1%, er, no. It's easy money - get yourself above £500K and it's a lot of earnings, especially at 41% or 51% tax rates.....

it's a tax - it's been subject to fiscal drag - you pay a tax for the privilege (in inverted commas if you want) of buying a property, PLUS you pay the fees to register the transfer etc. It's easy tax revenues and information gathering, that's all..... - and if you added CGT to sales, you'd just see a complete freezing of the market as people just did not sell and held their property - intergenerationally, so most people would only be renting from the houseowners who could and did buy and you couldn't afford to buy a family house as you've have to put so much of your 'earned' equity to the taxman and go even more into debt to buy - so you won't - you'll just rent.... - and in the meantime the government will take those taxes it does raise and use them for 'social and welfare costs/vote buying', depending on your point of view....

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1%, er, no. It's easy money - get yourself above £500K and it's a lot of earnings, especially at 41% or 51% tax rates.....

it's a tax - it's been subject to fiscal drag - you pay a tax for the privilege (in inverted commas if you want) of buying a property, PLUS you pay the fees to register the transfer etc. It's easy tax revenues and information gathering, that's all..... - and if you added CGT to sales, you'd just see a complete freezing of the market as people just did not sell and held their property - intergenerationally, so most people would only be renting from the houseowners who could and did buy and you couldn't afford to buy a family house as you've have to put so much of your 'earned' equity to the taxman and go even more into debt to buy - so you won't - you'll just rent.... - and in the meantime the government will take those taxes it does raise and use them for 'social and welfare costs/vote buying', depending on your point of view....

Which is why applying taxation to the ownership itself is more just

CGT and Stamp duty are just ways the gov can pretend to be charging for the land free-ride without eally doing so

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Which is why applying taxation to the ownership itself is more just

CGT and Stamp duty are just ways the gov can pretend to be charging for the land free-ride without eally doing so

and what do you think will happen to rents if they charge for ownership ? They will simply rise, making it harder to save to buy.

And if you meant, charges for having owned and on the gain - electoral suicide - the biggest beneficiaries are the elderly - and they are the most politically active....

why do we need to tax it at all - other than because the government is p1ssing £200Bn plus a year on the social and welfare benefits schemes. Or are you saying, it's immoral that people can make money out of their own houses that they paid for ? I take it you'll say the same about a car dealer who wants retail money for his car, or perhaps it's wrong a company should make any profit at all on the goods they sell ? This is not a socialist world - if someone else will pay Y for a house you paid X for, what's the problem and why should it be taxed ? If you can't afford to pay Y, go buy another house - and if you can't buy one locally, then, apart from a safety net of minimum standard housing (which is full of the people on the social take vy the way (as well as the deserving ones), then move or earn more. That's not that unfair, is it ? Why is there an 'entitlement' ?

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Which is why applying taxation to the ownership itself is more just

CGT and Stamp duty are just ways the gov can pretend to be charging for the land free-ride without eally doing so

Putting any kind of tax on things just means you'll be inflating the value artificially.

Tax is one of the causes of HPI, people will always attempt to 'make good' the costs by upping their asking price, even in a non-bubble environment.

Making a profit on housing is historically always just a gamble, people thought their house rises in value all the time, but actually, the overall value stays the same when you remove inflation (and bubble illusions).

So, you've not really profited, but because it looks like that on paper, you'll get robbed.

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Putting any kind of tax on things just means you'll be inflating the value artificially.

Taxing things tends to increase scarcity, which raises price

This rule only applies to things that are actually extracted or produced – land is not produced and so taxing it cannot increase its scarcity and so increase its price. Taxation on land pulls the price down by reducing the incentive to hold land without an intended use

Tax is one of the causes of HPI, people will always attempt to 'make good' the costs by upping their asking price, even in a non-bubble environment.

A tax on land certainly isn’t.

A tax on buildings may be some cause of hpi by making buildings more scarce. The principle cause of hpi is the elite’s refusal to tax land in accordance with the privilege it wields over other’s natural rights; this turns land ownership into a net privilege and this inflicts a cost on producers (including the producers of houses)

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Rental prices are not driven by landlords' costs.

you are assuming a continued spread of properties amongst a lot of people - taxes like this will simply concentrate ownership and there will be a localised forcing up of rents - look at what happens when one person owns several petrol stations in the same area.....

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Taxing things tends to increase scarcity, which raises price

This rule only applies to things that are actually extracted or produced – land is not produced and so taxing it cannot increase its scarcity and so increase its price. Taxation on land pulls the price down by reducing the incentive to hold land without an intended use

Taxing things increases their scarcity because it removes people's purchasing power. In other words, it slows dows the exchange of goods by making people pay more than it's fair value every time.

And if you tax all the land there is -- it means that every bit of forest or meadow is going to have to earn it's keep, with lots of nasty consequences.

A tax on land certainly isn’t.

A tax on buildings may be some cause of hpi by making buildings more scarce. The principle cause of hpi is the elite’s refusal to tax land in accordance with the privilege it wields over other’s natural rights; this turns land ownership into a net privilege and this inflicts a cost on producers (including the producers of houses)

Everyone 'owns' a piece of land in the UK, even if they rent -- renting/leasing means you own it for a limited time. A place to live is also not a luxury, but a basic need (remember why we don't have VAT on veg etc...?)

If I make bread and sell it to you for £1, but then the tax man decides he wants 50% -- I'm not going to lower my price, but charge you £1.50.

So neither you nor me has any profit, but the tax man has mugged us both, because you had to pay the tax and so have less money, which means you'll not be able to afford the cakes I baked to sell as well.

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you are assuming a continued spread of properties amongst a lot of people -

This would be on of the results of taxing land - the tax can't be passed on in price because it cannot increase scarcity

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This would be on of the results of taxing land - the tax can't be passed on in price because it cannot increase scarcity

Scarcity is the wrong term here, we don't have too few houses, we have too many overpriced houses that people cannot afford to buy.

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This would be on of the results of taxing land - the tax can't be passed on in price because it cannot increase scarcity

yes it can - are you going to go live on an acre on the outer Hebrides or pay more to rent a 2 bed flat in SW6 ? Where's your job. Well, tough, pay it, because if you don't, someone else will..... whether there is loads of land, there is not loads of it near the work......

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Taxing things increases their scarcity because it removes people's purchasing power.

A tax on produced goods reduces the incentive to produce, thereby increasing the scarcity of those goods and raising price. You can model it as the producer keeping his costs, but price is not directly a matter of producer costs, scarcity is.

However, land is not produced, so all of that is academic when it comes to land.

And if you tax all the land there is -- it means that every bit of forest or meadow is going to have to earn it's keep, with lots of nasty consequences.

Nonesense - if nobody wants to pay to do anything with it, its ‘keep’ is zero.

If I make bread and sell it to you for £1, but then the tax man decides he wants 50% -- I'm not going to lower my price, but charge you £1.50.

But that is a charge on production; land is not produced and so there can’t be any charge on its production when it is taxed.

If the tax man charges for owning 1 acre of land, the price a owners can sell the land for reduces.

Think about it, this really is quite simple

So neither you nor me has any profit, but the tax man has mugged us both, because you had to pay the tax and so have less money, which means you'll not be able to afford the cakes I baked to sell as well.

A land tax falls directly on owners and cannot be passed on – for reasons outlined above.

Edited by Stars

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and while we are at it, not allow the cost of any extension work to be offset against the profit.

Or take inflation into account. We could apply the same principle to tax-free allowances and tax bands, freeze 'em at current levels while inflation rips -- it's the nominal sums that are important to people, right? ;)

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Taxing things tends to increase scarcity, which raises price

This rule only applies to things that are actually extracted or produced – land is not produced and so taxing it cannot increase its scarcity

If the tax forces me to sweat my productive land to the point of desertification, there will be less productive land as a result of the tax.

Same goes for any land-use that involves choosing between careful long-term husbandry and rapacious short-term exploitation ... the value and thus the tax-assessment of the land will be set at the most exploitative margin, leading to a kind of tragedy of the commons.

But we've had this debate before :lol:

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If the tax forces me to sweat my productive land to the point of desertification, there will be less productive land as a result of the tax.

And there is no more reason for this to happen than with privately collected rent which would be set by the same market forces (minus the speculative premium). You are left with attempting to show how a lower usage cost for land results in more exploitation being neccessary in order to use it.

You can't.

Edited by Stars

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yes it can - are you going to go live on an acre on the outer Hebrides or pay more to rent a 2 bed flat in SW6 ? Where's your job. Well, tough, pay it, because if you don't, someone else will..... whether there is loads of land, there is not loads of it near the work......

It can't - other landlords will sell in response to the tax, making your intended higher price impossible

Edited by Stars

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And there is no more reason for this to happen than with privately collected rent which would be set by the same market forces (minus the speculative premium). You are left with attempting to show how a lower usage cost for land results in more exploitation being neccessary in order to use it.

The reason is that it imposes a fixed, periodic monetary cost to land ownership, at the moment you can leave your land unexploited and it need cost you nothing, you don't need to command a constant stream of currency in order to continue owning the land.

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