The first is that she will abolish stamp duty. The aim, she says, is to help young people buy homes. What she has very clearly never done is look at the data on what the impact of changes to stamp duty have on house prices. Almost invariably, cutting stamp duty results in an increase in house prices.
So cutting stamp duty on shares will increase share prices and so increase investment.
The case against the Financial Transactions Tax is proven……
One of the hazards of Spud’s life. Say anything and he contradicts something he said before. It’s only going to get worse as he goes round the bend even further…
Stamp duty was never paid on new issue shares. And they are investments. The issued share market is a zero sum game. The buyer’s investment is the seller’s disinvestment.
So sure, it’ll make a slight difference to the attractiveness of buying a new issue because when you come to sell it as an issued share, the profit should be greater by the stamp duty amount. But in practice, the effect would be trivial. What’s important is the earning per share which translates into share price.
Stockbrokers will be pleased. Abolishing stamp duty will make churn cheaper. More lovely commissions!
For how long? Won’t competition drive them back to their current margins, or close to it?
Tim, I’m in an ethical pickle. Do I slag off Ritchie or Kemi? Both are pitiably easy. 🙁
OK: Kemi. Stamp duty is a bizarre choice to build your sink-or-swim keynote pitch around. Not saying anything about the economics of it, just from a political pov.
Does stamp duty come up in doorstep conversions often with the Tories’ 6 remaining activists? She might as well have picked insurance tax or something. Stamp duty might well be important, but I don’t think it has much persuasive power. I just don’t think people think about stamp duty very much. Maybe they should, but it’s hard to imagine stamp duty inspiring protests or riots, no? Suggesting this is not the peg Kemi should have chosen to hang her jacket on in these emotional and distressed times. It would have been a great pitch circa 2008, but now?
Sort of like promising to radio for help an hour after Jap bombers started firing torpedoes at your battleship. At least Admiral Phillips had the decency to go down with his ship. I expect Kemi to commandeer a lifeboat tho.
What you say is true, Steve, but at this stage she’s fighting to hang on to her job as Tory leader rather than win a general. In that context Stamp Duty is a winning topic ‘cos Tories still care a lot more about house prices than they do about foreign occupation.
Ooh, you’re right. I’d completely forgotten Kemi’s idea of political positioning is whatever she last read in the Daily Mail. Tbh if they didn’t have a conference this week, I could easily have forgotten Kemi exists.
It was a belter of a speech that might just have changed the course of political history. Some of our best leaders are black don’t you know.
I care a lot about both, but I’m not a Tory.
Everyone gets their knickers in a twist about Boomers sitting on the property wealth of their under-occupied vast houses and insist they downsize. A large number look at the costs of doing so and realise that after those costs they’ll simply be considerably worse off with little to show for their expenditure, so sensibly enough they sit tight instead.
In two years I’ll want to “downsize” from my very pleasant 2-bed flat in leafy but increasingly diverse Norf Lahnden, and buy somewhere modest outright in somewhere hideously white. To do this I need to extract the most equity I possibly can from this flat. Stamp duty, and the way it is tiered, hits me hard both directly and by depressing my flat’s potential selling price, although not a hard as Reeves’ threatened wealth tax @ £500,000 will.
Downsizing and moving for older people has obvious costs other than financial. One has to endure the disruption, make a new life and friendship circle at a time when it is difficult to do that. If you want to encourage older people to do it, make is as cheap and easy as you can for them.
Incentives – and disincentives – matter.
I certainly don’t think anyone should be encouraged to downsize.
Foreigners should be compelled to fuck off in large numbers instead.
Britain would benefit hugely from a house price crash. Always boiled my piss seeing those stupid stories in the Daily Mail celebrating rising housing costs. I’m a homeowner too but my house is not an “investment”, it’s where my family lives. I’d rather houses were cheap as chips to benefit our people as a whole even if it means I can never move.
It’s not about encouraging so much as not discouraging.
The bigger thing though is people getting out of London and the South East. It’s why I would end ALL council housing and ALL housing benefit to the city. You move there if you can afford it. You’re unemployed, barely earning, retired, go to Norfolk or Somerset where you can do those just fine.
I think Kemi is trying to play a long game, correctly in my view. She was elected with a promise to spend time in introspection because the Tories were utterly spent and utterly untrusted. You don’t fix that with a new logo and heady rhetoric.
You stay relatively quiet and then come back with a modest, roundly welcome policy with no great political benefit.
Low-key and sensible – that’s what may start to rebuild trust amongst the salt-of-the-earth folks the Tories need to win back. It’s what she was elected to do and it’s a harder road than noisy Labour bashing. Eroding trust in them doesn’t automatically build trust in you.
Of course, Reform may well smash ’em to bits anyway but I’m more willing to listen now.
PS, is anyone else impressed by Zia Yusuf’s media performances?
And at least they’re starting to look at supply side reforms, if only modestly but it’s a start.
But she’s already promising 150,000 deportations a year and £47Bn of spending cuts, leaving the EHCR, slashing foreign aid and a whole bunch of other things Tory MPs have no intention of doing.
There’s been tons of heady rhetoric coming out of the Dead Tree Party this week, they’ve been desperate to let us know they’re more radical than Reform. There’s nothing modest or incremental about this.
Then, on the day of her big speech, she reverts to stamp duty. This is a wildly inconsistent tone imo, and looks like they’re just randomly throwing shit at a wall hoping something will stick.
“Does stamp duty come up in doorstep conversions often with the Tories’ 6 remaining activists? She might as well have picked insurance tax or something. Stamp duty might well be important, but I don’t think it has much persuasive power. ”
I always say this about EU and fishing rights. Utterly irrelevant to the UK economy. But it pushes people’s buttons, like the video game industry doesn’t. You announce things about fishing (and do them) so you can get into power to liberalise the video game or whisky industries.
No-one ever talks about things like open skies, which allowed for more airline competition. It had a bigger impact than rail privatisation, which was really a total non-event (because the government still micromanage what runs). I think liberalising the spectacles market under Thatcher was probably a bigger deal than privatising electricity.
What he has clearly never done is look at the data or studies on what the impact of changes to stamp duty have on house prices…
Academic studies (e.g. Best & Kleven, Journal of Public Economics, 2018) found that around 60–70% of UK stamp duty cuts are capitalised into higher prices in the short term, but also that transaction volumes rise and that the overall welfare effect is negative — meaning it’s a bad tax economically, even if it raises revenue easily.
Over the longer run, modelling suggests the price effects fade as the housing stock and supply respond to the higher turnover.
QED… or quantum erat dimwitum
Removing Stamp Duty would enable people to afford to move more frequently, which is good.
The unpleasant side effect is more conveyancing work hence revenue for the legal profession.
On the lunchtime news yesterday they kept saying “they’ll have to find the money from somewhere else…”
NOOOO!!!!!!!! JUST STOP SPENDING!!!!!!!!!!!!!!!!!!!!!!!
The Spudster makes a valid point. A buyer adds to the house price stamp duty, transfer fee, mortgage raising fee, removal van, new curtains, furniture, and so on and so on, to calculate a total price. The mortgagor does the same, to calculate affordability. In exactly the same way an employer takes wages, contributions, workspace, equipment, tea & biscuits, and so on and so on, to get to the total cost of an employee.
Mike Finn is the only one here who has grasped this.