Monday, November 18, 2013

Remove Stamp Duty and inflate house prices further, say Conservative MPs

Stamp duty should start at £500,000, say Conservative MPs

"Stamp duty should be scrapped on all homes worth less than £500,000, a group of Conservative MPs has recommended. The Free Enterprise Group is also calling for the threshold at which people start paying higher-rate income tax to increase to £50,000. The MPs argue that middle-income households need more help to improve standards of living and that government can make more efficiencies. The stamp duty change would save taxpayers £2.4bn, they say." Of course then the non-home buyers would suffer because they would have to make up the £2.4bn deficit. And the home buyers would suffer because this would force up house prices by a huge multiple of the stamp duty they no longer have to pay. Great policy - everyone loses except landlords and second home owners (eg MPs).

Posted by orcusmaximus @ 12:42 PM (2595 views)
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10 thoughts on “Remove Stamp Duty and inflate house prices further, say Conservative MPs

  • ABSOLUTELY. Because Most people owning houses 500k and below are wage earners, and the payment of stamp duty severely impairs the labour mobility of our most important employees. Why accept a £10k pay rise for an economically important role when you have to pay £20k in stamp duty, plus all the other expenses to relocate?

    We would be better off transferring this tax to general taxation. Everybody would be better off, and the complexities of stamp duty mean that it must be very expensive to administer.

    If there is a stamp duty it should be only what is necessary to maintain a land registry, and to aid transparency, should be a charge from Land Charges with a breakdown of costs.

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  • But we also need to end capital gains tax for investment properties, because investors who want out of the market are unable to sell if they purchased, say, 10 or 20 years ago, because most of their capital gains go up in smoke, so instead, they let their buildings rot and go up in smoke.

    Eliminate capital gains tax on property investments, or at least put a cap on it, and you would see scores of empty homes flood the market, providing masses of capacity for people, also freeing up other capital to be invested more productively.

    Trust the free market, do not strangle it by tapping every profit centre. understand that profit is what drives the economy.

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  • @ 1/2

    All I can say is it’s a good thing you’re not in charge.

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  • @liberta ‘because most of their capital gains go up in smoke,’ Even 28% CGT is by no means ‘most’ by any stretch of the imagination. CGT isn’t a good tax but it’s made much worse by the primary residence exemption – an invitation to speculate in property instead of proper economic activity

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  • Libertas, everything you post can be summarised thusly…

    “The economy would grow a lot faster if we encouraged investment by reducing the tax burden on the capital-rich. We’re just a few more exemptions away from ensuring people rich enough not to work pay no tax whatsoever. If we could just get these tax-haven-confined wealth-creators in the clear, they might start doing something constructive with their capital instead of simply buying up monopoly rights and retiring at birth. We just need to make sure they pay no tax whenever they finally come to sell their monopoly rights. Then, I’m sure they’ll play ball, sell up and plough the money back into corporate investment or something equally productive.”

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  • mark wadsworth says:

    Reticent, you beat me to it.

    As Mombers says, if we look at specifics, CGT and SDLT are very bad taxes – not because they are on LAND but because they are on TRANSACTIONS (i.e. easily avoidable by simply not doing anything). LVT on the other hand is a splendid tax – if anything it encourages people to DO things.

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  • @5 reticent & MW @ 6 spot on

    Those that have ‘economic faith’ in capitalism hide from the simple fact that most capitalists want nothing to do with the free markets, just capitalize on monopoly, they will always, if allowed, look for the ‘free lunch’.

    The only way to have a true free market is to limit the formation of monopolies, This is why LVT is such a great idea as it makes people make a choice to put their effort and capital into real productive activity, instead of trying to hide from the free exchange of goods and services as monopolists do. And the mother of all monopolies, to paraphrase Winston Churchill, is the Land Monopoly.

    LVT is the choice for people who really want to see free markets work in our society.

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  • Mombers, you are an idiot to suggest that the general public would benefit from capital gains tax on their primary residence. Imagine the impact on somebody who purchased a house in 1980, then wanted to downscale. They would not be able to do it, as the downscaling would destroy their equity and they would be in financial limbo.

    End taxation on property transfers and more property will swap hands, resulting in a more healthy market and better price discovery. I hate to say it, but a land value tax would and council tax does have better impact on the housing market than stamp duty, as they do not affect when and where people buy and sell.

    Income tax is the same, it does not affect the timing of purchases, whereas VAT really puts people off going down the shop and buying things. Taxation at the point of transaction reduces transactions and harms markets.

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  • Remember that capital gains tax also applies to stocks and shares and to commercial property, so Mombers, it does not encourage investment in property. Residents get exemptions because they have to live somewhere.

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  • Libby: “I hate to say it, but a land value tax would and council tax does have better impact on the housing market than stamp duty, as they do not affect when and where people buy and sell.

    Income tax is the same, it does not affect the timing of purchases, whereas VAT really puts people off going down the shop and buying things. Taxation at the point of transaction reduces transactions and harms markets.”

    You’ve made a couple of important first steps there, now keep going!

    Add “National Insurance” to your list of really bad taxes.

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