As forecast here, Stamp Duty receipts are now lower than before Mr Osborne’s big increases in the rate of Stamp Duty on second homes, and dearer properties.
Other tax receipts will also have fallen from the sharp reduction in transactions that has resulted. It means less income and corporation tax from estate agents, removal firms, and home improvement businesses that do well out of people moving.
So why not cut the rates to raise more revenue?
August 4, 2018
Don’t even go there.
They will blame Brexit.
August 4, 2018
Tax operates like a dual carriageway paper chase & litter collection fiasco without purpose for all the fuss it generates. Tax should be simple & efficient, applied to a few fundamentals. The immensely complicated procedures of collecting millions of fragments with allowances & rebates are designed only for the employment of work wasters. We need a Work Waste Tax at 100% to cleanse the system of the stench of stagnant incompetence.
August 4, 2018
Well what a surprise, people would rather stay in their own homes, and perhaps extend or make do, rather than move.
Given the huge cost of actually moving house, as well as stamp duty, is it any wonder. !
Better to only move when you absolutely have to, and when you do, to do so with big change, either Up or Down.
To do otherwise is to simply throw money away.
Once again another politician who kills the goose who lays the Golden eggs of tax income.
So the two most expensive investments people make and in which they have a choice, both houses and cars, are down because of high taxation.
Expect more stealth taxes, or more fiscal drift in tax allowances, to compensate for the shortfall.
August 5, 2018
Alan ,
There are at least 3 factors in production ; capital , labour and land .
Adam Smith and all the other classical economists explained why the major burden of taxation has to fall on land and not labour or capital . He proposed an annual ground rent for all freeholders .
The post classical economists , particularly apologists for the o.01% , deliberately sabotaged the subject by conflating land and capital as the same thing so claiming there are only 2 factors in production .
This enabled the feudal system which had ruled over Europe to survive the threat of industrial capitalism and a property owning democracy by the simple measure of moving from being landlords to financing landlords and buyers .
During the first 80 years of the 20th century , taxes on rents and regulation of lending prevented house prices soaring .
The decision to let banks have free reign in the mortgage market in 1982 is what has enabled the expansion of credit which has lead to higher house prices – not supply and demand .
The housing market has lost liquidity recently not because of high taxation but because of poor taxation – transaction taxes .
Let’s be clear , ridiculously high cost of living , especially high accommodation costs causes jobs to be offshored and is damaging to the economy so is NOT a good thing .
August 6, 2018
Odd take on modern economics Simon.
Bit like modern Marxism in disguise.
PS
House prices did soar in the first 80 years of the 20th century and some types of jobs are going offshore because of nations like China India and Korea have having their own industrial revolution like the UK did long ago.
Yet we have low unemployment and record numbers in employment in the UK.
So low that the Bank of England is now worried about the economy overheating they have just increased interest rates and reduced credit availability.
August 6, 2018
The Romans and their Byzantine continuation knew this-they applied a land tax throughout their long existence.It funded the state and kept the magnates tied into the state.
August 4, 2018
What a surprise, stamp duty is one of numerous stupid taxes, stupid rules and stupid tax complexity.
August 4, 2018
No. The housing market is slowing because of Brexit. *cough*
August 4, 2018
Stamp duty goes hand in glove with CGT/Capital Gain Tax
For instance there are people holding properties and other investments that have made good but they won’t sell because of ĆGT and then the added penalty of having to pay stamp duty for reinvesting..so they just sit tight and take whatever dividend..
August 4, 2018
Why not, answer, our chancellor, and the treasury think like socialists, not like market traders.
August 4, 2018
Will not happen. Hammond would lose face.
August 4, 2018
Not an overwhelming loss for him
August 5, 2018
Hammond for next Party Leader gets about 1% support among Tory Members so desperately unpopular is he. He is after all still cheating voters on the Osborne IHT Ā£1 m each threshold promise. I assume most of the 1% just ticked the wrong box by mistake or are suffering from something that makes them deluded.
August 4, 2018
Another clear example of the Laffer Curve effect. This was a virtue signalling policy by Osborne – look how we are taxing rich people – which has harmed the housing market, harmed the property industry and lowered tax receipts. Has Mr Hammond got the intellectual honesty to admit this and reverse the policy? I doubt it.
August 4, 2018
I think Mr Hammond has actually got the intellectual rigour to see the nonsense of this and other high tax policies. He used at least to be perfectly sound to my ears on economic policy. But has he the freedom to act rationally? There is much more chance of re-election by pursuing policies which make sense and can be defended with conviction rather than constantly playing tactically for the ‘centre’ – wherever that is supposed to be.
August 6, 2018
You might want to ask the people of the state of Kansas in the US how well the Laffer Curve has worked under governor Sam Brownback’s experiment to implement it.
August 4, 2018
What , cut rates and admit we have made a mistake ?
No way !
August 4, 2018
“So why not cut the rates to raise more revenue?2
Because that would mean admitting the big tax brigade are wrong.
August 4, 2018
It seems as though those whose responsibility it is to make the decisions about tax rates give little or scant regard to how much or how little revenue it will either generate or lose. By my reckoning, that smacks of incompetence unless there is some hidden reason for it that the rest of us are not privy to, as in increasing corporation tax for purely ideological or political reasons. But even then, in the final analysis, we come back to incompetence.
Yet if the Tories don’t get rid of May and Hammond ASAP, and put in place a good Brexiteer with an excellent financial pedigree, it looks like that is precisely what we are going to get – possibly even worse than what we have now.
How could we have let ourselves get into such a ridiculous situation?
Maybe next time, we might be a little more selective in whom we vote for, and take the time to ask ourselves what the various candidates actually stand for!
Tad Davison
Cambridge
August 5, 2018
No good asking them they just lie. May said Brexit meant Brexit and gave her Mansion House Speech but did the opposite. Cameron claimed to be a low tax at heart Conservative and Cast Iron EU sceptic. Osborne promised us Ā£1 million IHT threshold each.
How do you tell when such politicians are lying? Their lips are moving.
August 4, 2018
So why not cut the rates to raise more revenue…..
because we have a quasi socialist PM and Chancellor who would never countenance tax cuts.
Look at their reaction when Trump cut taxes, he was accused of breaking ranks.
This is one of the reasons they love the EU, a massive taxpayer funded trough.
August 4, 2018
John, I completely agree with you that low taxes are far more effective at gathering revenue – but the suffering of estate agents is perhaps less likely to gain a sympathetic hearing among at least some of us.
August 4, 2018
“So why not cut the rates to raise more revenue?” (Oh no, not the Laffer Curve myth again.)
You are just not getting the purpose of taxation. It is not about raising maximum revenue. Stamp Duty was increased to deter ownership of second homes and the building of big flash properties to be bought by foreigners.
Likewise, this government wants to deter Buy-to-Let, and is gradually going to tax it out of existence. It is ideologically committed to Owner-Occupation.
August 4, 2018
Whilst the reson for taxing us might be to change our behaviour the reduction in revenues was not what the Treasury were expecting.
August 4, 2018
Quelle surprise !
One does not even to be an economist to see that one comming. Not that it would have helped.
As interest rates rise some people will be looking very carefully at their spendingspending patterns.
One statistic that will be of importance over the comming months, will be mortgage arrears. If this begins to rise then the Tories really are finished. People will not forgive them if they lose their homes, jobs, business, families and loved ones. Remember what happened last time. And don’t think people will not vote Labour by trying to scare them, it won’t work.
August 4, 2018
I want to move house . The Stamp duty tax is putting a very large damper on me selling my over priced house in London . The house I wish to buy is Ā£600K . The Duty is Ā£20k .
Out -bloody -rageous .
The so called low tax Conservatives are having a laugh and you John go along with it ?
August 4, 2018
Agreed, but your party has morphed into a left wing socialist tax, spend and waste. Highest taxes in over 40 years for what? I really object to taxation without representation as I can’t vote for the least worst legacies!
August 4, 2018
Because like all socialist Governments John, it has nothing to do with revenue but about appeasing the left and showing they are being tough on those deemed to be well off.
Oh how I long for the day when we get a Conservative Government!
August 4, 2018
I must look out for the Evening Standard’s coverage of this issue. Or will the editor, whose lack of journalism experience should have precluded him from the job, just switch to another line of Brexit attack?
August 4, 2018
Dear John if you werenāt one of the more committed Brexiteers (and by the way an excellent constituency MP), you would have lost my vote a long time ago. Back-benchers need to sort out this shambles of a Government and put us all out our misery. That or face oblivion at the next election.
August 4, 2018
Why not cut the rates indeed? There is also the costs of people living in houses or places when they would prefer to have moved, had moving taxes been lower. Perhaps commuting long distances as a result and seeing less of their families or living i. The wrong type of house for them.
Turnover taxes are particularly economically damaging. Stamp Duty until 2014 was just 1% now it is up to 15% and it is hugely damaging to mobility. No point in buying unless you are fairly certain you will not be moving for many years. But then Inheritance Tax at 40% over Ā£325k, IPT now at 12%, the attackās on private pensions, the 20% VAT, the 80 tax on diesel and petrol, the 45% income tax, the attacks on Non Domās, the loss of personal allowances for many and child benefit for others, the circa 23% NI (both combined) the high 28% Capital Gains Tax on non real gains, the double taxation of landlord interest ….. all are hugely damaging. Plus the back door green crap energy taxes. Any the costs that result from an absurdly complex tax system and from daft employment and other laws and regulations on top too.
All this taxation and yet public services in the UK are still generally appalling and still deteriorating. The NHS, education, police, prisons, the court system, social services, roads, trains …….
Yet Hammond has the cheek to complain about low productivity. He is one of the main reasons for it.
August 4, 2018
This is not a financial decision, but a political one. Because BREXIT has not completed yet, the Chancellor lives in hope of reversing it and continues trying to prove that ‘Brexit is bad for the economy and especially bad for house prices’.
August 4, 2018
Philip Hammond’s taxation of profits that have not even been made by landlords is now forcing many landlords to evict good tenants or to put up their rents. His 3% extra stamp duty is another tax on tenants as are the bank lending restrictions on buy to let.
So what has the economic illiterate Philip Hammond got against tenants and landlords? Should I evict any I will make sure they know that Philip Hammond & T May are the reason. Landlords and properties available to rent are a very important part of the economy and essential for job mobility. Under the Thatcher/Lawson period they even gave tax relief for companies letting properties under the BES scheme. Landlords often also extend, improve and build new properties to let which are badly needed. They are often developers too and this activity is being restricted by banking restriction and rip off UK banks.
So what is motivating this absurd policy? Which complete idiot though it up? People often need to rent and not buy for all sorts of reasons. There is no point in buying until you are settled in one place for several years (especially with Hammond’s moronic stamp duty rates).
Why oh why do we always seem to be governed by complete and utter plonkers who never think anything through? It is not hard to see how damaging this is to the economy, jobs, rent levels and it’s electorally unpopular it is too.
August 4, 2018
Weatherspoons with their pro brexit magazine on every table still full I notice.
August 4, 2018
Because raising revenue is not Mr Hammond’s objective, he’s punishing property ownership. Standard procedure for a socialist Chancellor.
By the way, ukip will include privatisation of the BBC in their next manifesto (in addition to actually leaving the EU of course).
August 5, 2018
It’s yet another example of the fact that the rich decide what taxation they consider to be fair and won’t pay any more than that. We can hardly begrudge them; the top 1% of incomes do provide 27% of our tax revenues.
Rather less reasonable is that some international companies lower their tax burden by imposing internal copyright charges so that profits in countries with a low corporation tax are augmented and profits in countries with a high corporation tax are reduced. We may tremble in awe at high-tech Apple, Microsoft and Google but Amazon and Starbucks are just retailers.
While we’re on the subject, if we wanted to ‘help the high street’, we would reduce shop front business rates and impose some form of business rates on warehouse premises. No one that I know of seems to advocate this.
August 5, 2018
Hammond should have been replaced with someone who sees sense on this. Like our host, for example. Probably the best chancellor we never had.
May has no alternative to BTL because no Conservative government is going to build the number of public sector homes required to house those unable to buy. Yet Hammond is determined to put thousands of professional landlords like me out of business and charge us a huge amount of CGT for the priviledge.
But, of course, we would not have a housing shortage at all if May made good on Cameron’s pledge to reduce net migration to the 10s of thousands.
August 5, 2018
We have had some truly appalling chancellors. ERM John Major (without even a maths O level), 98% income tax and off to the IMF Denis Healey, Pension mugger Gordon Brown, IHT ratter and punishment budget George Osborne, soft loans to EU basket cases A Darling, wrong on every issue EUphile and dire Home Secretary Ken Clark. ERM fiasco Major & Lamont (Lamont now fairly sound but he cost me a few Ā£million with is ERM fiasco) and the dire wet Geoffrey Howe, who with his broken bat drivel speech helped to bring down Mrs Thatcher and give us the appalling idiot John Major.
August 6, 2018
“So why not cut the rates to raise more revenue?”
If the UK was using the euro, or the taxes were being applied by a local council, there would be nothing wrong with statement. Because taxes, for euro using countries, and local councils, do raise revenue for spending purposes.
It is different for the Westminster Govt which is essentially an issuer of the currency. There are other considerations to be made such as setting tax rates on harmful substances like tobacco to discourage its use, but the prime reason for taxation is to help regulate the economy.
So if we want more transactions and a more active economy, then by all means lower the taxation rates. Whether on property transactions or the more basic taxes like VAT has to be a matter of judgement and political opinion. If the economy is overheating, and inflation looks to be a worry, then it’s time to start thinking about putting them back up again.