Robert Peston: "Stamp Duty is a terrible tax."

I don't always agree with Robert Peston, but he has a really good post on X this afternoon, here, which is well worth reading. 


"Stamp duty is a terrible tax.  

It is not a tax on bad actions and behaviour, the kind of tax that may have a legitimate social purpose, like the duty on cigarettes.  It actually discourages activity that would be good for the economy and good for society.  

The duty dampens the market for houses. It discourages people from selling and buying homes.  

As such, it means older people stay in homes that have become far too big for them.  It keeps house prices out of reach for young people.  And it creates a disincentive for people to look far and wide for a new job, because of the incremental cost of selling up and buying a new property. 

So for all the £8bn to £9bn giveaways Kemi Badenoch could have dangled to shore up her and her party’s flagging support, and for all your inevitable cynicism that this is a naked bribe, there are many worse stunts she could have pulled.  

As it happens the chancellor Rachel Reeves and the Treasury have been looking at doing the same, though as part of a wider reform of taxation on housing - that would involve the imposition of a new annual tax on the value of more expensive properties.  

The reform package would be revenue neutral in the longer term, but very expensive in the first few years (because the new property wealth tax could only be phased in).  So the reform is probably not affordable for Reeves in her forthcoming November budget - given she has to fill a £30bn black hole. 

By definition, the abolition would be even less affordable for a Tory government that isn’t proposing to raise an equivalent sum from an annual charge on housing.  

But Badenoch is postulating £47bn of spending cuts - to welfare, overseas aid, social housing and so on - and perhaps some of these cuts would be  practical and deliverable.  Also she has at least four years, and maybe an eternity, before she has the power to do anything in government. 

Badenoch has however done a public service in putting stamp duty abolition firmly on the political agenda.  My hunch is that, one way or another, the days are numbered for this toxic tax."

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