Author Topic: Why Stamp Duty Land Tax should be scrapped  (Read 2577 times)

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Philofacts

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Why Stamp Duty Land Tax should be scrapped
« on: October 07, 2011, 12:58:41 pm »
It has been around since it was first introduced in the UK in 1694 to pay for the war with France and believe it or not it was only intended for four years!

But it generated such high revenues for the government that it was never repealed. Stamp duty was suspended in 1991 as a measure to stimulate the housing market. In the financial year 2007/08 the Inland Revenue received £6.5 billion from residential stamp duty.
Gordon Brown's 2005 Budget increased the zero rate stamp duty threshold from £60,000 to £120,000 increasing it again in the next Budget to £125,000. There are now 4 different rate bands from 1-5% applied to the total purchase price. Stamp Duty tax is easy to collect.  There is no escape for the majority of home buyers.

But no other purchase transaction attracts an increasing percentage tax burden.
VAT is set at 20%, on all transactions - no matter how more costly the item is, the percentage tax take is the same. A 15,000 Ford Focus is taxed at 20% the same as a £175,000 Ferrari.

With homes, the higher the purchase price the higher the percentage tax taken on the whole amount.
A home that sells for £200,000 is taxed at 1% (£2,000). A £1.2million home is taxed at a rate of 5% (£60,000). If the same lower rate was applied there would be a saving of £48,000 Stamp Duty Tax.  Indeed with the same principal, the Ferrari purchaser would pay five times more in tax than the Ford buyer; he would be paying a rate of 100% tax to buy his car!

A tax on freedom of movement
Stamp Duty is a tax on movement. The Dale Farm "travellers" have a greater freedom of movement than the average UK householder. Travellers don't give the government thousands of extra pounds in tax just because they want to live someone else. Why then should the UK home owner? Freedom of movement is a basic Human Right. UK home owners are being discriminated against because taxing that freedom and artificially financially restricting the ability of any individual to live where they want to is both unfair and unjust. Those renting are not required to pay an additional tax when they move home and rent another.

Stamp Duty takes money out of the economy
If Stamp Duty did not exist, people moving home would have more money to fund home improvements, furniture and carpets, putting money back into the economy - facilitating growth. 

Stamp Duty causes harm to the housing market
Stamp Duty stagnates the property market. It postpones people's decision to move and influences house price levels, as they tend to bunch under each threshold level after which, they jump more than they might otherwise if the same percentage was applied or if Stamp Duty did not exist. It increases the cost of moving to levels beyond practicality resulting in families being crowded into homes their families have outgrown.

It will be a bold government that abolishes this unfair and unjust TAX on property ownership and freedom of movement. But it would completely kick-start the economy and lead us out of recession.
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