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Getting rid of Stamp Duty would boost not only the housing market but the UK’s wider competitiveness, a conservative think-tank has suggested.
The Centre for Policy Studies (CPS) has called on chancellor Rishi Sunak to take drastic action and remove what it terms an unecessary “extra burden” when homes are sold.
The move follows news last week that the UK was in the lower half of the 2020 International Tax Competitiveness Index.
Pointing out that the top rate of Stamp Duty is now 12 per cent, the report, entitled Stamping Down Why Cutting Residential Stamp Duty is Easier than You Think, suggests the charge has become “a tax on mobility and aspiration – as well as one of the least popular taxes that the government imposes”.
The CPS warns that Stamp Duty actively puts people off buying and pushes down numbers of newbuild properties and suggests the idea of outright abolition “certainly has an appeal”.
Offering alternatives to the current “untenable” system, it recommends removing nine-in-10 homes below £500,000 from Stamp Duty while reducing it on other properties to a rate of 4-5 per cent.
The report also suggests that, “if any revenue is to be found, it should be through a levy on those who are purchasing, but who are not resident here in the UK, set at a reasonable rate”.
Rejecting the idea that the UK’s current financial situation is not appropriate for a cut in Stamp Duty, the CPS warns: “If there is not the space for even sensible cuts to Stamp Duty now, then we risk ending up in a situation where all taxes can only go one way – up – and the government may be seen as having given up on tax cuts for the foreseeable future.”