A Labour government would oppose a cut to stamp duty because “it is not a way to spend public money wisely”, shadow financial secretary James Murray has told MPs.
Speaking at yesterday afternoon’s (May 17) debate on council tax and stamp duty alternatives in the House of Commons, Murray, a Labour and Co-operative MP for Ealing North pushed back on Conservative arguments for scrapping the tax on property purchases.
Currently, stamp duty land tax is only payable on properties purchased for £250,000 or more.
This was increased as part of Liz Truss and Kwasi Kwarteng’s “mini” Budget in October last year from £125,000 and was one of the few measures that was not scrapped following Kwarteng’s sacking and Truss’s resignation.
However, as part of the Autumn Statement earlier this year, current chancellor Jeremy Hunt rolled back on the measures and said the freeze would only be in place until 2025.
Speaking yesterday, Murray told MPs that the economy has been left “reeling from the long-term damage the government had done, with current and future homebuyers facing a Tory mortgage penalty”.
“This was not the time to spend £1.7bn a year on that tax cut. Despite that, the government pushed ahead. So when it comes to stamp duty, it is clear that they do not have a record of spending public money wisely,” Murray added.
Conservative MPs argued that although stamp duty is a progressive tax, it is exacerbating the housing crisis.
Simon Fell, Conservative MP for Barrow and Furness argued that stamp duty should remain in place for second home and non-residential buyers but said it should be abolished for other properties.
“Taxing transactions discourages homeowners from moving, whether it be an older couple downsizing or a growing family upsizing.The economic impact extends to job opportunities rejected due to moving costs,” Fell said.
“The chancellor’s stamp duty holiday gave the UK property market a much-needed boost during the pandemic, but it also highlighted the merits of abolishing it altogether. Stamp duty hampers housing stock utilisation and residential mobility. Abolishing stamp duty on owner-occupied properties would unleash transactions and alleviate the housing crisis.”
Retrofitting
Liberal democrat MP for North Shropshire, Helen Morgan, raised the question of whether stamp duty and similar taxes may be used as an opportunity to help the UK meet its climate targets.
Morgan noted that there may be potential to graduate the tax to reflect the energy performance of a building “so that we might encourage people to retrofit buildings”.
Similar ideas have been put to government before, but some in the industry have said while a stamp duty rebate for retrofitting is a good idea in principle, it would likely be unsuccessful in reality.
Others also noted that a stamp duty rebate scheme would alienate people who already own their homes.
“Why should someone who is buying a home get the benefit whilst existing owners don't?,” mortgage broker Samuel Mather-Holgate said at the time.
