As the Guardian has reported this morning:
A Labour government would bring closer the “dream of home ownership” for young people by abolishing stamp duty for all first-time buyers purchasing homes worth up to £300,000, Ed Miliband will announce.
In one of the boldest policy announcements of the election campaign, designed to steal David Cameron's thunder as the champion of a property-owning democracy, the Labour leader will pledge that 90% of first-time buyers would save up to £5,000.
Let me candid: I am a big enthusiast for the capability of tax to shape the society we live in. I think that is one of its fundamental roles. Those who simply talk about tax as a revenue raising mechanism totally miss its significance for this purpose.
But, and this is a big but, tax cannot achieve everything that is asked of it. That is impossible without undue complexity. And there are occasions when introducing a tax law creates an open ended commitment when better mechanisms might be available.
This is one such occasion, I think. This law will be complex. Defining a first time buyer is going to be hard. And once created closing this allowance will be as difficult. A direct grant of up to £5,000 to first time buyers would have been so much better., If time limited then the political gain from renewing it would have been available. I fear this is the wrong tax subsidy.
It has also to be said that all stamp duty subsidies do flow straight through into higher house prices. This one will, like all the others. So, as a problem solving mechanism stamp duty rebates are no solution.
The solution in this case is tackling house supply shortage, for which we need house building, more social housing and green quantitative easing to fund it (or which more later today, I hope).
And what all this says is that we do need an Office for Tax Responsibility to provide better advice on tax policy after 7 May.
And a Tax Dodging Bill to close all unnecessary tax loopholes and reliefs.
Helping homeowners is fine, but tax may not always be the answer. It's time to work out when it is.
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I’m not sure it will lead to an increase in house prices, i’ve always thought stamp duty a poor tax. It should see the saved money being reinvested back into the economy which will in turn create wealth and jobs.
Gov subsidised mortgages, and stamp duty relief both address the sypmtoms of the problem, not the underlying economic problem. We should take immediate steps to increase supply AND moderate demand when possible. It goes without saying we need to build more houses, but is it feasible to take a multipronged approach:
Regional investment/development incentives.
Phased movement of UKgov jobs to regions.
Progressive council taxation to discourage multiple ownership.
Refocusing of infrastructure spend to regions to get best bang for taxpayer buck.
Just spitballing here, any thoughts?
I think I’ve proposed / supported all in my time
And am happy to do so now
I was pleased with Labour’s rent control policy announced yesterday, although it didn’t go far enough, nor was it presented in a way which could have made it easier to defend against the claim of ‘economic illiteracy’. (FFS if landlords are prevented from raising rents above inflation are they seriously going to stop letting their properties?). But my heart sank when I heard this morning’s policy.
I agree that house building especially social ought to be a priority policy for the Labour party. The Tories in the 80’s understood that own ownership would be the catalyst to thier vision of modern Britain. social house building and green quantitative easing could do the same for Labour
“Defining a first time buyer is going to be hard. And once created closing this allowance will be as difficult. A direct grant of up to £5,000 to first time buyers would have been so much better”
Out of curiosity, how would you define a first time buyer for the purposes of your proposed grant?
Much easier
Credit checks
Land registry
Defining what is practically easy can be difficult
You find out when you try to write law
Is there a definitional problem? Won’t they just dust off and re-use the legslation passed just before the 2010 election that introduced an exemption for first-time-buyers of residential property worth up to £250,000 (double the usual limit of £125,000 that still applies)? There was a definition in s.57AA that was inserted into the Finance Act 2003. See http://www.legislation.gov.uk/ukpga/2010/13/section/6
“In this section “first-time buyer” means a person who–
(a) has not previously been a purchaser in relation to a relevant acquisition of a major interest in land which consisted of or included residential property, [etc]”
This relief was withdrawn in 2012, so clearly it is not impossible to remove it either.
Whether it is a good idea is another question.
I think that was open to too much abuse
Perhaps. In 2012, the government said it was “ineffective” and had not increased the number of first time buyers. http://www.bbc.co.uk/news/business-15944999
Why are we focusing on more debt enslavement? Why not a policy which creates social housing at reasonable rents instead of creating an aspiration for owning one’s own home and to be in debt until you retire and beyond? Nothing against home ownership but in this case the priority seems to miss the point about lack of suitable housing for large sections of our society. It’s interesting that on a straw poll taken at a hustings yesterday Cameron’s plan to sell of housing association accommodation went down like a lead balloon with only five hands up for the plan and a sea of hands against.
I think too many people on the progressive Centre/ Left are getting ahead of themselves almost thinking its in the bag. Ashcroft’s polling released today is a serious wake up call putting the Cons 6% ahead and that’s most likely to mean another 5 years of the ConDems until 2020. The Tory press hysteria is constant and the Sunday Mail’s ‘worst crisis since Abdication’ story reached new depths but it is reaching news stands all over the UK.
What matters now is reaching the voters with an alternative vision be it campaigning, donations, counter attacking the Tory led media, whatever but time is running out.
Greens up 3 to 7 and SNP down 2 to 2?
That’s not credible polling
I don’t buy that one
But I do accept risk