Tuesday, 18 June 2013

A TAX ON ASPIRATIONS

Although I've always regarded Stamp Duty as an unfair and distorting  tax due to its "slab" structure I was nonetheless taken aback by its impact in recent years compared to in the mid 1990s as revealed in a report called " Stamping on Aspiration" produced by Homeowners Alliance.  The average Stamp Duty paid on buying a home jumped from £532 in 1996 to £5957 in 2011.......a ten fold increase! Stamp Duty has risen 7 times faster than inflation,6 times faster than average earnings and 5 times faster than house prices since 1996. The government now forecasts that by 2017 it will make as much money taxing people buying their home as it will from the so-called "sin-taxes" on alcohol and tobacco. So much for the governments stated desire to foster conditions which aid aspiring homebuyers .The report concludes that the persistent ratcheting up of Stamp Duty by successive governments is a key reason for the decline in UK home ownership since 2002. Aspiring homeowners have had to tackle the quadruple-whammy of rising rates of duty, new Stamp Duty bands, frozen  thresholds and rising house prices. Given the plethora of current Government initiatives to stimulate demand in the housing market....First Buy / New Buy / Home Buy / FLS ..... surely the time is right to take a surgical knife to Stamp Duty and sacrifice some tax receipts for the prospect of greater affordability and more flexibility for homebuyers.  Short term counter-cyclical measures such as those I've listed may well have some  relevance and impact as the economy bumps along, but more strategic solutions on topics  like Stamp Duty ( and housing supply) though  much tougher to initiate , are the really pivotal changes which could re-mould our housing market for  the decade to come.       

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