Stamp Duty Land Tax – A Tax Against (British) Humanity

Stamp Duty Land Tax Calculator

Stamp Duty Land Tax – A Tax Against (British) Humanity

A family home in London for £750,000 attracts SDLT (Stamp Duty Land Tax) of £30,000. (We are not talking Buckingham Palace here). How do you feel about a tax, for which you get in return, well, er, I am not sure what this is meant to provide in return!

Apart from the tiresome sideshow of hearing how you have irritated the irritating middle classes, what effect does Stamp Duty Land Tax have on the economy? This is a fantastic question the government is NOT asking itself.

If the government, Treasury and George Osborne were to realise that it reduces mobility, relocation, recruitment, leaving home, upsizing, downsizing, getting married, getting divorced, moving into the catchment for a better school and so on and so forth.

Seriously. It is reasonably well known that some taxes are just counter productive. Like taxing the super wealthy and those earning more than £150k at 50%. Those that can find a way around it – will – and rightly so. Thus some taxes raise less than projected as people just don’t want to (or can’t) pay them.

In fact the powers that be know this before they even embark – rendering these changes political – not fiscal weapons.

But not so with Stamp Duty Land Tax . If the middle classes want to move – they have to pay. These are real fiscal weapons against the greatest target – the hard working majority. Stamp Duty averaged between 1% and 2% between 1958 and 1997. Then Gordon Brown (remember him??) started the attack on moving house, pushing SDLT to 3%, 4%, now 5% over £1m, 7% over £2m and 15% for a Ltd Company. Now the Treasury is hooked on the £6.9bn this raises each year.

Now this is painful but possible when the housing market is bubbling away growing at 2-4% per year. When it ain’t – it means people get stuck, the economy loses transactions, activity, and dynamism.

Stamp Duty Land Tax is a prime target for being slashed in a pre election budget. If Mr Cameron & Mr Osborne haven’t worked this one out – they don’t deserve to be in power post 2015. We shall see.

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