House prices in London have become so astonishingly high that many millennials may never be able to afford a property there. The Evening Standard published an article advising under-35s to stop purchasing lunch every day in order to save money. One tweet shattered this argument by reminding this London paper that if every young person did that, it would still take them 123 years to save for a deposit in the capital.
In 2014, former chancellor George Osborne raised the rate of stamp duty on properties worth more than £937,500. He later implemented a 3 per cent stamp duty surcharge to punish citizens with second homes and make more room for first-time buyers.
Mr. Osborne should have known better- increasing taxation never raises prosperity for all.
"A property transaction tax"
Mark Pollack, founding director of estate agent Aston Chase, told City AM at the time that stamp duty is a charge on moving house, calling it a property transaction tax. He was correct in his analysis. If the Chancellor, Philip Hammond, is serious about stimulating property democracy, he must scrap stamp duty, which many commentators will be watching out for today.
As Ben Southwood, the head of research at the Adam Smith Institute, told City AM, some taxes damage the economy more than others, and stamp duty is the worst. In 1993, 42 per cent of properties had to pay it. This year, that number increased to 73 per cent.
There is a scarce supply of housing in this country, but by taxing people on transferring homes, the Government is only harming the housing market. At least both Norman Lamont and Alistair Darling saw sense in reforming this land tax when they both occupied the chancellery in the early 90s and late 00s respectively. Yet their measures were not enough in the long-term.
"£10 billion of damage to the economy"
A recent Australian Government review discovered this tax costs 75p from every £1 raised. This totals £10 billion of damage to the economy.
Scrapping stamp duty would need to be paid for, but as a recent Adam Smith Institute paper suggested, this could be done by linking council tax to current rental property values instead of disproportionately taxing people of all incomes across the nation.
Unfortunately for Mr. Hammond, he has his hands tied by a big state Prime Minister. The sooner a proper Thatcherite can lead the Conservative Party again, the better. The Tories should never be the party advocating higher taxes and more state control. Sadly, that's what it has become.
