Helping first-time buyers is noble, but movers need a stamp duty cut too, says SIMON LAMBERT… and perhaps the seller should pay
However, the general whining over on the left is that this won’t reduce house prices. So,? And?
Transactions taxes gum up a market, make it less liquid. That’s why they’re such bad taxes. Their deadweights are hugely high as compared to income, consumption or land taxes. They’re actually even worse than capital and corporate taxes in this manner.
So, get rid of bad transaction taxes, raise other less bad ones for a neutral overall stance and we’re better off just be changing how we tax, not the level of taxation.
Interesting factoid – the IFS has an old paper out there pointing out that stamp duty on shares, total revenue will rise upon its abolition such are the deadweights of transactions taxes. Another factoid – the EU insisted that a financial transactions tax would lower total revenues, such are the deadweights. I wouldn’t want to insist that this would be true of stamp duty on houses but it wouldn’t surprise me if that were the outcome as well.
Transactions taxes are bad taxes, we shouldn’t have them.