Stamp duty completely distorts the housing market by having absurd cliff hangers meaning an extra penny on a house price can cost thousands extra. Trying to sell a house, for example, which is worth just over £250,000 then becomes a nightmare. It means a jump in duty from 1% to 3%, which obviously becomes a deterrent to anyone attempting to try to sell or buy a house within a significant range of the £250,000 bracket. At the very least if we are to retain the tax it has to be altered.
It is welcome therefore that in the Autumn statement that Osborne is attempting to iron out the stamp duty 'jumps'
The chancellor said that from midnight the current system, where the amount owed jumps at certain price levels, would be replaced by a graduated rate, working in a similar way to income tax.Clearly with the 2015 election in mind Osbourne's headline plan has a multitude of benefits; mainly appealing to "middle England" who are attempting to successfully sell their house, the headline of a tax cut and an attempt to outflank Labour on proposals of the mansion tax:
BBC political editor Nick Robinson said the headline announcements were "real electioneering" by the Conservative chancellor, saying the stamp duty proposals were the Tories' "own version of the mansion tax" proposed by Labour and the Lib Dems.Thus we can see, along with Article 48 on immigration, Conservative policy is beginning to take shape six months before an election. Policy not aspiration. Contrast this with Ukip whose 'non-existent' policies are in a mess, and unlike the Iron Lady whom Farage alleges he admires, he is for turning, often, and with embarrassing consequences.
Whatever we think of either party, what is clear is with the steady rolling out of policy Tory candidates and PPCs will be prepared well in advance, particularly in hustings. However UKIP PPCs will have a manifesto dumped on them just weeks before and any policies contained within liable to be changed on the whim of its leader. We are thus seeing a repeat of what's gone on many times before. Its grassroot support deserves much better.
That aside we also see the cynicism of the Tories. Osborne could not have been unaware that stamp duty was fundamentally broken, he's been informed before. Thus it is very interesting that he attempts to address the issue particularly just before an election. He's allowed a broken system, and all the difficulties it entails for the rest of us, to continue right until an impending election when he makes the necessary amendments purely for political purposes.
This is of course further evidence that the only mechanism which concentrates politicians' minds is the threat of being removed from office before an impending election. Thus the current representative system of being "lied to on Thursday and ignored on Friday for another five years" does not work. Above all else we need another way.
4 year parliaments and we vote for 25% of them each year?
ReplyDelete"Above all else we need another way."
ReplyDeleteAye. And it starts with a large wall and well armed firing squad.
I've been saying for years that we should phase out stamp duty - and so have many other people. It is blatantly unfair to tax people for moving house. Most people move because they have to - their home is too big, too small, or they move jobs, or someone dies. For the state to charge you thousands of pounds for the privilege of doing so is outrageous. Maybe it is even a violation of the much-vaunted Freedom of Movement within the EU?
ReplyDeleteOsborne's concession to first-time buyers is a step in the right direction but yes, blatant electioneering, and most young people still cannot afford to buy.
I guess we come back to Ronald Reagan's phrase; " If it moves, tax it"
DeleteThis always gets to me in the run up to an election. The current government are all about "if re elected we will......" the question to me always has to be, you just had 5 years and have not, so why has it taken so long to realise this?
ReplyDeletethough by far the more important point here is "if re elected we will......." There is very clearly a bit missing from this statement, and it should scream at everyone. It should read "If re elected we will...have a referendum to ask if we may........."
The stamp duty cliffs are very apparent in our extended family too. In June 2014 my wife and I each traded our own homes (no stamp duty as mine sold for £70K and hers for £84K, we bought a new build 3 bed detatched, with a large garden on a nice new estate cul de sac we had to pay 1% as it cost £184K.
ReplyDeleteThe wifes sister bought a 2 bed terrace on a main road with no garden, but located in Cheadle Manchester not Cumbria, it cost her £260K + 3% stamp duty. How on earth is her home considered a "mansion" compared to ours which is around 3 times larger?
I always thought stamp duty was a bad tax, but the way its administered really made it totally insane
I always thought stamp duty was a bad tax, but the way its administered really made it totally insane
DeleteAgreed, which begs the question why it took them so long? The cliffs made houses harder to sell - which means the Treasury gets no tax at all if a house doesn't sell.