‘Stamp duty is UK’s worst tax – scrap it to help housing market’
Stamp duty on property sales is gumming up the housing market, stopping people from moving to the jobs they need, and keeping people in houses that are too large for their needs, according to a free-market think tank.
A new report released by the Adam Smith Institute suggests that stamp duty is the most damaging tax Britain has, and scrapping it should be top of the Chancellor’s agenda in the run-up to the Budget on November 22.
The paper argues that stamp duty is deeply damaging to the UK housing market.
Economists in Australia found that a similar tax there was costing 75p for every £1 raised: the institute claims that with stamp duty costing British people £12 billion a year, this means the tax may cause as much as £10 billion worth of what it calls “deadweight losses.”
This happens because it says stamp duty gums up the housing market by penalising people from moving house. While the lack of supply of new houses is still the biggest cause of the housing crisis, it is exacerbated by the duty stopping the existing housing stock from being used efficiently.
“By penalising older people for downsizing after their children have left home, for example, stamp duty stops larger homes from being sold to new families, making the effective supply of family-sized homes even tighter” says a statement from the institute.
“Since stamp duty creates a built-in cost to moving it also creates a roadblock to people moving from one part of the country to another to find work, trapping people in low pay and preventing them from advancing” it adds.
Kindly shared by Estate Agent Today