Stamp duty farce really isn't funny
The government’s plan to offer homebuyers a stamp duty holiday, if it can be called a plan, would rank as one of the most hapless pieces of tax policymaking of recent years
Regardless of its likely ineffectiveness, a proposal to exempt individuals
from paying the duty was always likely to have very serious immediate effects on
the market.
As anyone with an understanding of the market could have predicted, the
market seized up this week as homebuyers held off in expectation of a cheaper
deal.
Beyond providing more evidence that the government is on its last legs, what
can politicians learn from this experience, so that they might not repeat it?
One key thing is not to play politics with tax. All the evidence suggests that
Number 10 briefed the policy to journalists as part of yet another ‘relaunch’ of
Gordon Brown’s premiership. Politicians should realise that such initiatives
fail every test in trying to convince us that they are acting in our best
interests. Throw money at a failing market doesn’t work, and it will also be
seen as yet another cheap giveaway.
National politics aside, there is a more important issue for tax advisers.
The Treasury needs to regain some of its self-respect if it is to form any
durable tax policy going forward.
When the story emerged, Alistair Darling and Treasury officials passed the
buck, saying they did not brief the policy, and blamed it on media speculation.
Whether or not it is to blame, it is certainly responsible. An effective tax
policy and an economy functioning in an orderly manner is the Treasury’s raison
d’etre. Darling and his officials should have denied having any plans as soon as
possible.
The tail-end of this administration looks like being very messy for the
Treasury, and for the tax profession as a whole.