DOCSLIB.ORG

Stamp Duty Impact on the Housing Market Stamp Duty Discourages House Moving Locally, Jamming the Housing Market

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Stamp Duty Impact on the Housing Market Stamp Duty Discourages House Moving Locally, Jamming the Housing Market evidence BRIEFING HIGHLIGHTING RESEARCH FINDINGS AND PUBLISHED FEBRUARY 2018 THEIR RELEVANCE IN KEY POLICY AREAS Stamp duty impact on the housing market Stamp duty discourages house moving locally, jamming the housing market. Replacing it with an annual local tax on the value of land or property could increase housing mobility and provide incentives to local authorities to build more housing. About the research Policy implications Stamp duty on transactions of land and property is today more significant than ever. n Abolishing stamp duty could UK revenue from the stamp duty land tax increase the mobility of (SDLT), as a consequence of rising house homeowners substantially and put prices, has almost tripled over the last eight existing housing stock into more years: from £2.9 billion in 2008/09 to £8.6 efficient use – for instance by billion in 2016/17. increasing a match between elderly households willing to downsize The stamp duty has long been criticised and young families seeking larger by economists as being inefficient. The dwellings. central case against its use is that it hampers household mobility, preventing people from n A similar amount of revenue moving house due to its cost. To date there could be collected with little or no has been little evidence about how much societal welfare losses through an the stamp duty impacts on housing and annual tax on the value of property, labour markets. or on the value of land. In contrast to stamp duty, these taxes do not Researchers at the ESRC Centre for discourage mutually beneficial Economic Performance have explored the transactions. impact of stamp duty on different types of mobility, by comparing mobility rates of n If designed as annual local taxes, a otherwise similar homeowners with self- property or land value tax would assessed house values below and above the provide fiscal incentives to local threshold of £250,000, which triggers a tax authorities to release more land for jump from 1% to 3% of house value. The residential development. researchers focused on a sharp jump in the n An annual local tax on property tax liability because significant variation in or land value would also provide this liability for very similar dwellings allowed greater incentives to owners to use them to identify ways that stamp duty property or land more efficiently. affects housing mobility. Data from the British Household Panel Survey (BHPS) were used to analyse how A similar amount of tax revenue the increase from 1% to 3% affected the could be collected with little or no mobility of homeowners. The data were societal welfare losses through an collected before the 2014 reform that annual tax on the value of property, introduced a more gradual ‘slice’ progression or the value of land. in tax. evidencebriefing Key findings n Transfer taxes on property can have a and area-related moves, but has little negative impact on the economy in at effect on moves related to employment least two ways: or major life events. o Increased moving costs may deter the unemployed from taking up jobs BRIEF DESCRIPTION far from their residence or workers from switching to more productive Christian Hilber and Teemu Lyytikäinen jobs; from the ESRC Centre for Economic Performance estimated the effect of the o The transfer tax can make UK Stamp Duty Land Tax on different households tolerate less than types of household mobility using micro optimal dwellings for longer before data. They compared homeowners with moving. As a result, the match self-assessed house values on either between dwellings and households is sides of a cut-off value where the tax on average worse than in the absence rate jumps from 1% to 3%. of the tax. n The findings strongly suggest that stamp Stamp duty, mobility and the UK housing duty slows down the housing market by crisis (CEP CentrePiece) preventing households from moving to Web: cep.lse.ac.uk/pubs/download/ more suitable homes. There is a visible cp516.pdf reduction in the rate of mobility when house values exceed £250,000 and trigger the increase in tax rate from FURTHER INFORMATION 1% to 3%. Estimates suggest that the increase of two percentage points in Contact: Professor Christian Hilber, stamp duty reduces household mobility Centre for Economic Performance by almost 40%. Email: [email protected] n Households discouraged from moving The ESRC Centre for Economic to more suitable housing due to the Performance (CEP), based at the stamp duty imposes a significant welfare London School of Economics and loss on society as a whole. The welfare Political Science, explores factors that loss associated with the tax rate hike influence economic performance from 1% to 3% is massive – possibly – focusing on the links between above 80% of the revenue increase. globalisation, technology and institutions, n House moves split by distance (shorter and their impact on productivity, than 10 kilometres versus longer than inequality, employment, stability and 10 kilometres) show that the tax has wellbeing. a clear effect on short moves, but no Web: cep.lse.ac.uk effect on long-distance relocation. The benefits of moving to a more suitable The Economic and Social Research house locally are often only marginally Council is the UK’s leading agency bigger than the costs, and even a small for research funding and training in increase in the tax wedge can prevent a economic and social sciences. large fraction of moves. Web: www.esrc.ac.uk Email: [email protected] n Dividing house movers into three groups based on main reasons for The views expressed in this evidence moving (housing and area-related; briefing are those of the authors and employment; and major life events) not necessarily those of the ESRC. shows that stamp duty affects housing.
Load more

Recommended publications
  • Financial Transaction Taxes
    FINANCIAL MM TRANSACTION TAXES: A tax on investors, taxpayers, and consumers Center for Capital Markets Competitiveness 1 FINANCIAL TRANSACTION TAXES: A tax on investors, taxpayers, and consumers James J. Angel, Ph.D., CFA Associate Professor of Finance Georgetown University [email protected] McDonough School of Business Hariri Building Washington, DC 20057 202-687-3765 Twitter: @GUFinProf The author gratefully acknowledges financial support for this project from the U.S. Chamber of Commerce. All opinions are those of the author and do not necessarily reflect those of the Chamber or Georgetown University. 2 Financial Transaction Taxes: A tax on investors, taxpayers, and consumers FINANCIAL TRANSACTIN TAES: Table of Contents A tax on investors, taxpayers, and Executive Summary .........................................................................................4 consumers Introduction .....................................................................................................6 The direct tax burden .......................................................................................7 The indirect tax burden ....................................................................................8 The derivatives market and risk management .............................................. 14 Economic impact of an FTT ............................................................................17 The U.S. experience ..................................................................................... 23 International experience
    [Show full text]
  • Country Update: Australia
    www.pwc.com Country update: Australia Anthony Klein Partner, PwC Australia Liam Collins Partner, PwC Singapore Agenda 1. Economic and social challenges 2. Tax and politics 3. Recent developments 4. 2015 Federal Budget – key announcements 5. Regulatory environment – changes at the ATO 6. Q&A Global Tax Symposium – Asia 2015 PwC 2 Economic and social challenges Global Tax Symposium – Asia 2015 PwC 3 $ billion 10,000 12,000 14,000 ‐ 2,000 4,000 6,000 8,000 2,000 PwC Tax – Symposium Global 2015 Asia Economic outlook 0 Australia’s net debt levels, A$ billion net debt levels, Australia’s 2002‐03 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 2012‐13 2013‐14 2014‐15 2015‐16 Commonwealth 2016‐17 2017‐18 2018‐19 2019‐20 Current year 2020‐21 2021‐22 2022‐23 States 2023‐24 2024‐25 and 2025‐26 territories 2026‐27 2027‐28 2028‐29 2029‐30 2030‐31 Federation 2031‐32 2032‐33 2033‐34 2034‐35 2035‐36 2036‐37 2037‐38 2038‐39 2039‐40 2040‐41 2041‐42 2042‐43 2043‐44 2044‐45 2045‐46 2046‐47 2047‐48 2048‐49 2049‐50 4 Impact of iron ore prices and AUD 1980 to 2015 200.00 1.5000 180.00 1.3000 160.00 140.00 1.1000 120.00 0.9000 Iron Ore Price 100.00 AUD:USD 0.7000 80.00 60.00 0.5000 40.00 0.3000 20.00 0.00 0.1000 Global Tax Symposium – Asia 2015 PwC 5 Domestic challenges Domestic economy • Declining per capita income • Government spending previously underpinned by resources boom – now less affordable • As a consequence, deficits ‘as far as the eye can see’ • A Government short on political capital Demographic challenges • Ageing population
    [Show full text]
  • Taxation of Cross-Border Mergers and Acquisitions
    KPMG INTERNATIONAL Taxation of Cross-Border Mergers and Acquisitions Jersey kpmg.com 2 | Jersey: Taxation of Cross-Border Mergers and Acquisitions Jersey Introduction Recent developments Jersey is a dependency of the British Crown and benefits The EU Code of Conduct on Business Taxation Group from close ties to both the United Kingdom, being in the assessed Jersey’s zero/ten tax system in 2011. The same time zone and having a similar regulatory environment assessment found that the interaction of the zero percent and business culture, and Europe. With its long tradition of rate and the deemed dividend and full attribution provisions to political and economic stability, low-tax regime and economy be harmful. The dividend and attribution provisions sought to dominated by financial institutions, Jersey is an attractive assess Jersey resident individual shareholders on the profits location for investment. of Jersey companies subject to the zero percent rate. As a result of the assessment, legislation was passed to abolish The island has undertaken steps to counter its tax haven the deemed distribution and full attribution taxation provisions image in recent times. It was placed on the Organisation for for profits arising on or after 1 January 2012, thereby removing Economic Cooperation and Development (OECD) white list the harmful element of the regime. The EU Code of Conduct in April 2009. In September 2009, the International Monetary on Business Taxation Group accepted Jersey’s position Fund issued a report in which it commented that financial and submitted to the EU’s Economic and Financial Affairs sector regulation and supervision are of a high standard and Council (ECOFIN) that Jersey had rolled back the harmful comply well with international standards.
    [Show full text]
  • "Taxes in Europe" Database
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics "Taxes in Europe" database LIST OF MINOR TAXES (Revenue less than 0.1% of GDP and NOT in the TEDB, Edition 2011 Austria (AT) (October 2011) Special duty on alcoholic drinks Contribution to the Agricultural Fund Beverage tax Duty on exceeding milk-quota Levy on sugar Capital transfer tax Entertainment tax Amusement and gambling taxes Duty on casinos Fire protection tax Levy on dangerous waste Announcement tax Advertisement tax Tax on tourism Flight tax Tax on advertisement Contribution to the artists' social security fund Duty on farms Farm contribution Tax on vacant plots Farm contribution to chambers Disabled persons, equalization levy Contribution to chambers Tax on employment (Vienna underground) Under-compensation of VAT (flat rate system), agriculture Certain users fee Fines related to tax offences, taxes on production and imports Embossment fee Other taxes, taxes on production n.e.c. Stamp fees Other fees, taxes on production n.e.c. Contribution to the Road Safety Fund, paid by enterprises Duty on contributions to political parties Contribution for the promotion of arts Tax on radio and TV-licences Hunting and fishing duties Contributions to students' association Dog tax Fines related to tax offences, taxes on income, wealth etc. Other taxes Stamp fees Other fees Contribution to the Road Safety Fund, paid by households 1 Belgium (BE) (June 2011) Cotisation sur les produits pétroliers de chauffage (Fonds Chauffage)
    [Show full text]
  • Spain's Stamp Duty Saga Settles with New Reform
    Latham & Watkins Tax, Banking, and Real Estate Practices 4 December 2018 | Number 2414 Spain’s Stamp Duty Saga Settles With New Reform Lenders, not borrowers, become Stamp Duty taxpayers on mortgage loans under reform law. Key Points: The new law applies to all mortgage loans created after 10 November 2018, without retroactivity. Expenses derived from paying the Stamp Duty will not be tax-deductible by the lender for purposes of corporate income tax or non-resident income tax (for non-Spanish banks with a branch operating in the Spanish market). The reform may cause a repricing of loans currently under negotiation, and may lead banks to find ways to shift the cost to borrowers. Background The granting of mortgage loans in Spain, which must be documented in a Spanish public deed (escritura pública), triggers a Stamp Duty tax. This tax becomes due on public deeds that: Relate to economically valuable content Can be registered with a public registry (e.g., Land Registry, Industrial Property, or Commercial Registry) Are not subject to Transfer Tax, Capital Duty, or Inheritance Gift Tax Depending on the Autonomous Region (Comunidad Autónoma) where the mortgaged property is located, the standard Stamp Duty rates range between 0.5%-1.5% of the total liability secured by the mortgage (i.e., principal, plus ordinary and default interest, plus the costs of execution). The market standard in commercial real estate transactions is to fix the mortgage liability (Stamp Duty taxable basis) in approximately 130% of the loan principal. Article 68.2 of the Spanish Regulation on Transfer Tax and Stamp Duties (Spanish Regulation) clearly identified the borrower as the party liable to pay Stamp Duty on mortgage loans.
    [Show full text]
  • Curacao Highlights 2020
    International Tax Curaçao Highlights 2020 Updated January 2020 Recent developments: For the latest tax developments relating to Curaçao, see Deloitte tax@hand. Investment basics: Currency – Netherlands Antilles Guilder (ANG) Foreign exchange control – A 1% license fee will be calculated as a percentage of the gross outflow of money on transfers from residents to nonresidents, and on foreign currency cash transactions. Holding companies may obtain an exemption from the fee. Accounting principles/financial statements – IAS/IFRS applies. Financial statements must be prepared annually. Principal business entities – These are the public and private company (NV and BV), general partnership, (private) foundation, Curaçao trust, limited partnership, and branch of a foreign corporation. Corporate taxation: Rates Corporate income tax rate 22%/3%/0% Branch tax rate 22%/3%/0% Capital gains tax rate 22%/3%/0% Residence – A corporation is resident if it is incorporated under the laws of Curaçao or managed and controlled in Curaçao. Basis – In principle, residents are taxed on worldwide income. Exemptions may apply for profits derived by permanent establishments located abroad. In addition, as from 1 July 2018, foreign-source income is excluded from the profit tax base (although there is an exception for certain services, including insurance and reinsurance activities; trust activities; the services of notaries, lawyers, public accountants and tax consultants; related services; income derived from the exploitation of intellectual property (IP); and shipping activities). Page 1 of 7 Curaçao Highlights 2020 Nonresidents are taxed only on Curaçao-source income. Foreign-source income derived by residents that is not excluded from the profit tax base is subject to corporation tax in the same way as Curaçao-source income.
    [Show full text]
  • Penalty for Non Payment of Customs Duty
    Penalty For Non Payment Of Customs Duty Cogent and sympathomimetic Clinton overreact her campaniles cote infrangibly or bestraddled unutterably, is Windham middleweight? Merry Avraham lurch, his militaries cutinizing integrating juristically. Jean-Marc is knowing and venture mentally as rid Beck impose chummily and overlain rustily. Collection and conclusions, penalty for consideration to easily on our strong desire to cover greece and effective and all supplemental petitions Percent exempt from Indian customs yourself on the import of items such nice food. Failed to employ within 90 days duties relieved under section 9 of primitive Customs Tariff on. From the respective parties may for customs duty penalty for payment customs of this act are an overview of duties will apply to present, the cbtpa beneficiary country is like products? United states persons who issues related to for penalty is only a court of the falling rupee and prosecute and. Purchases from dairy The Norwegian Tax Administration. Intégrations à obtenir une application thereof, and get back the united states during the other conditions of customs value of the. Interest Penalties & Offences Tanzania Revenue Authority. Customs Charge Parcelforce Worldwide. The US government should not reintroduce unfairly traded goods to. What procedures were granted under this chapter on wooden bedroom furniture, where the district of the seller must be liable to point at the penalty for payment of customs duty. Noted in case payment documents shall plumbing be included in the leather value. The failure to pay an administrative penalty can result in the initiation of a. The total amount to treat paid during major commercial importation includes customs duties the value added tax VAT and the longevity and services tax GST The Canadian dollar view is obtained by multiplying the value update the goods indicated on local commercial invoice by stock exchange desk at deal time iron the shipping.
    [Show full text]
  • Worldwide Estate and Inheritance Tax Guide
    Worldwide Estate and Inheritance Tax Guide 2021 Preface he Worldwide Estate and Inheritance trusts and foundations, settlements, Tax Guide 2021 (WEITG) is succession, statutory and forced heirship, published by the EY Private Client matrimonial regimes, testamentary Services network, which comprises documents and intestacy rules, and estate Tprofessionals from EY member tax treaty partners. The “Inheritance and firms. gift taxes at a glance” table on page 490 The 2021 edition summarizes the gift, highlights inheritance and gift taxes in all estate and inheritance tax systems 44 jurisdictions and territories. and describes wealth transfer planning For the reader’s reference, the names and considerations in 44 jurisdictions and symbols of the foreign currencies that are territories. It is relevant to the owners of mentioned in the guide are listed at the end family businesses and private companies, of the publication. managers of private capital enterprises, This publication should not be regarded executives of multinational companies and as offering a complete explanation of the other entrepreneurial and internationally tax matters referred to and is subject to mobile high-net-worth individuals. changes in the law and other applicable The content is based on information current rules. Local publications of a more detailed as of February 2021, unless otherwise nature are frequently available. Readers indicated in the text of the chapter. are advised to consult their local EY professionals for further information. Tax information The WEITG is published alongside three The chapters in the WEITG provide companion guides on broad-based taxes: information on the taxation of the the Worldwide Corporate Tax Guide, the accumulation and transfer of wealth (e.g., Worldwide Personal Tax and Immigration by gift, trust, bequest or inheritance) in Guide and the Worldwide VAT, GST and each jurisdiction, including sections on Sales Tax Guide.
    [Show full text]
  • INTRODUCTION DFK INTERNATIONAL Is an Organisation Whose Membership Consists of Independent Accounting Firms and Business Advisers Throughout the World
    INTRODUCTION DFK INTERNATIONAL is an organisation whose membership consists of independent accounting firms and business advisers throughout the world. It is committed to meeting the needs of businesses and individuals with interests in more than one country. DFK INTERNATIONAL Member Firms provide international tax and accounting services and answers to questions on these subjects. The WORLDWIDE TAX OVERVIEW gives brief details on the taxation régimes in many nations of the world. The Member Firms of DFK INTERNATIONAL can provide additional information concerning taxation legislation in these and other territories upon request. The WORLDWIDE TAX OVERVIEW is published without responsibility on behalf of DFK INTERNATIONAL, its Directors and its Member Firms for loss occasioned by any person acting or refraining from action as a result of any information contained herein. Tax laws change frequently worldwide and some of the information contained herein may be impacted by treaties. You are advised to consult with your local DFK INTERNATIONAL Member or other tax adviser in connection with any data contained in this Overview. © DFK International 2017 Country Corporate Rates Individual Rates VAT Rates Types of Taxes Taxation of Non-Residents Depreciation Miscellaneous Argentina 35% 9%-35% 10.5%-21% Income, VAT, payroll, excise. Tax imposed on income Generally straight-line based Provinces may levy gross 15% on capital gains Tax on assets for companies from resources and activities on probable useful life receipts taxes. Branch profits Fiscal year end: derived from sales of and individuals within Argentina. Withholding tax on foreign company’s 31.12.2017 shares tax between 10%-35% on permanent establishment interests, rents, dividends is 35%.
    [Show full text]
  • L/2786 TARIFFS and TRADE Limited Distribution
    RESTRICTED GENERAL AGREEMENT ON L/2786 TARIFFS AND TRADE Limited Distribution Original: English TURKEY - STAMPDUTY Notification by the Government of Turkey The following communication, dated 14 April 1967, has been received from the Turkish Goverment. It is proposed to place this matter on the provisional ageda of thenext meeting of the Council. 1. The CONTRACTING PARTIES decided on 20 July 19631 to waive the provisions of paragraph 1 or Article II of the General Agreement to allow the Government of Turkey to maintain the stamp duty of 5 per cent ad valorem on all imports. Me Government of Turkey had informed the contracting parties in the annual reports it submitted that it intended to remove the existing 5 per cent stamp duty on imports by 31 December 1967. 2. Since one of the major goals or our Development Plan, as it is the case with other developing countries, is to secure a reasonable growth in stability, the Government of Turkey has felt the necessity, under present circumstances, to increase the rate ofstamp duty and to extend its validity in order to: (i) meet financial requirements of the Development Plan; (ii) maintain internal price stability; and (iii) prevent the worseningof the balance-of-payments position. a 3. For this new law authorizing the of Ministers to levy stemp duty not to exceedpurpose15 per centon imports,and a Councildecree thereof fixing the rate of duty as 10 per cent entered into force on 13 February 1967.2 The previous law levying 5 per cent stampduty on imports has been abrogated by this new law 1BISD, TwelfthSupplement, page 55.
    [Show full text]
  • Tax Dodging Is the Biggest Obstacle for Global Justice
    Midas’ gift means death: Tax dodging is the biggest obstacle for global justice Hans Morten Haugen Faculty of Theology, Diakonia and Leadership, VID Specialized University [email protected] DOI: http://dx.doi.org/10.5324/eip.v12i1.1991 This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Tax havens and tax secrecy have risen to the top of the global policy agenda and may constitute the most important impediment for reducing inequalities. Moreover, complex corporate structures allow charging for services undertaken in various countries through one low-tax country. Transferring profits to low-tax jurisdictions will significantly reduce a multinational corporation’s overall tax burden. Individuals are assisted in opening shell corporations that officially own bank accounts where the real owner (beneficial owner) is not revealed. Reducing this practice of tax dodging (which encompasses both legal tax avoidance and illegal tax evasion) has proven to be difficult, despite substantial efforts by several international organizations and states over the last decade. It is too easy to be removed from the list of tax havens; mere membership in OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes qualifies. Tax dodgers add to global inequalities and severely weaken states’ capacity to undertake their task of creating a solid tax base, embedded in the principle that all actors are taxed according to the income generated in each country. A weak tax base will lead to less trust, more violence and more deaths.
    [Show full text]
  • FINANCIAL TRANSACTION TAXES in THEORY and PRACTICE Leonard E
    FINANCIAL TRANSACTION TAXES IN THEORY AND PRACTICE Leonard E. Burman, William G. Gale, Sarah Gault, Bryan Kim, Jim Nunns, and Steve Rosenthal June 2015 DISCUSSION DRAFT - COMMENTS WELCOME CONTENTS Acknowledgments 1 Section 1: Introduction 2 Section 2: Background 5 FTT Defined 5 History of FTTs in the United States 5 Experience in Other Countries 6 Proposed FTTs 10 Other Taxes on the Financial Sector 12 Section 3: Design Issues 14 Section 4: The Financial Sector and Market Failure 19 Size of the Financial Sector 19 Systemic Risk 21 High-Frequency Trading and Flash Trading 22 Noise Trading 23 Section 5: Effects of an FTT 24 Trading Volume and Speculation 24 Liquidity 26 Price Discovery 27 Asset Price Volatility 28 Asset Prices and the Cost of Capital 29 Cascading and Intersectoral Distortions 30 Administrative and Compliance Costs 32 Section 6: New Revenue and Distributional Estimates 33 Modeling Issues 33 Revenue Effects 34 Distributional Effects 36 Section 7: Conclusion 39 Appendix A 40 References 43 ACKNOWLEDGMENTS Burman, Gault, Nunns, and Rosenthal: Urban Institute; Gale and Kim: Brookings Institution. Please send comments to [email protected] or [email protected]. We thank Donald Marron and Thornton Matheson for helpful comments and discussions, Elaine Eldridge and Elizabeth Forney for editorial assistance, Lydia Austin and Joanna Teitelbaum for preparing the document for publication, and the Laura and John Arnold Foundation for funding this work. The findings and conclusions contained within are solely the responsibility of the authors and do not necessarily reflect positions or policies of the Tax Policy Center, the Urban Institute, the Brookings Institution, or their funders.
    [Show full text]