‘There is no case for maintaining stamp duty
In the deepest and most far reaching analysis of the UK tax system in more than 30 years, the Mirrlees Review has concluded that “there is no sound case for maintaining stamp duty and we believe that it should be abolished.”
“Stamp duty ensures that properties are not held by the people who value them most. It creates a disincentive for people to move house, thereby leading to potential inflexibilities in the labour market and encouraging people to live (and businesses to operate) in properties of a size and in a location that they may well not otherwise have chosen”
The Institute for Fiscal Studies is also reported as saying that Stamp Duty is an “obviously stupid” tax which stops people from moving home because of the huge tax bill associated with buying a new property.
Paul Johnson, director of the IFS, is reported as saying that there was “little about the UK tax system which looks like it was deliberately designed”.
Stamp Duty Land Tax (SDLT) is currently payable at different rates, starting on all homes sold for more than £125,000 (or above £250,000 for first-time buyers). The highest rate is now 5% on properties sold for more than £1m.
In addition to scrapping Stamp Duty, the Mirrlees Review has advocates sweeping changes to Council Tax, VAT, fuel duty and income tax.
It wants to see Council Tax based on up to date values (not those from 1991) and payments made proportional to house values.
It also wants to see income tax and National Insurance merged, and a move towards a comprehensive system of congestion charging on the roads, replacing most of fuel duty.
The Institute also calls for VAT to apply to all purchases, with current exemptions such as food and children’s clothing abolished.