In a debate about the UK’s growth strategy on Tuesday in Westminster Hall, John Redwood (pictured), Conservative MP for Wokingham, said not having stamp duty rates set at the right level may end up costing the Treasury money because it was stopping people from moving house.
He added that lowering taxes would also help the government achieve its economic aim of promoting prosperity.
The government should look at the issue “very carefully”, said Redwood, because the property market had been damaged by high stamp duties.
He added: “I do not think that the government is even maximising the revenues from stamp duties, and it might not be a bad idea for them to ask: “What are the rates that would maximise the revenues?”
“At the higher price levels in property, transactions have been very badly affected; indeed, they have been massively reduced by the very high rates at the top end of the market. So, the Treasury constantly has to revise down its forecasts of how much revenue it collects from stamp duty.”
Between 2009 and 2015 the deficit was reduced, said Redwood, mainly through a series of tax rate rises and the collection of tax revenue out of the UK’s modest economic growth rather than cuts in public spending. He said these rises had turned the UK into a relatively higher tax economy than it has been in the past.
If people had not been put off moving by high stamp duty rates it would allow people to trade up or down to a property that suited their needs, he added. Moving house also generates income for people who work in the refurbishment and removals business, he said.
Redwood added: “So my number one message to the government is not to underestimate the damage that clumsy taxes can do, and they may even end up costing the Treasury, as stamp duty has done, because it is not collecting as much as it should.”
