Thursday, 4 December 2014
Stamp duty tax is back to front
Lots of media coverage today of the Government's rapid change to stamp duty taxes. Overall they are a bit of a giveaway to the vast majority of people, whilst being very heavy on those who have been successful or lucky or both.
The Conservatives implementing Labour Policies really is a sign that my post of Monday demonstrating how little difference there is between the two main parties is a confirmed. There are only slight technical differneces between the parties in reality.
Moreover, the real, fair reform to stamp duty has been missed, as one would expect of the Government.
In the long-term, who makes a profit from houses? It is the people who buy them, because we seem to have endless house price inflation driven by government giveaways like reducing stamp duty taxes when a market bubble is growing.
Also, when you sell your main house, the capital gain is tax free. This means you literally make lots of money in much of the Country. The longer you have owned your house, the better it gets. In the Southeast and London this has frequently meant that due to the tax light nature of house ownership, many people have made more money by buying and living in a house than by working.
So, who struggles? Well it is the young and those trying to get on the ladder. It is very expensive to buy and hard to borrow the large sums needed. A large deposit is needed and plenty of cash for lawyers fees and stamp duty.
Surely then, logic dictates that those who have made the profit and are realising cash should pay the stamp duty tax - this is the seller. They should pay the stamp duty. After all, they have the money and the tax free gain. Sellers' have real equity where most often buyers are actually borrowing money to pay the stamp duty tax.
The fairest meausure to to to mitigate the inter-generational economic warfare that the Government continues to wage (pensions held high by the triple-lock, house prices supported with various measures), is to put the pain of stamp duty onto the sellers and remove it from buyers.