You can always tell when Budget day is approaching.
There’s lots of comment from every imaginable quarter about what the Chancellor of the Exchequer should do, how beleaguered sectors of both business and private life could be helped as if each demand was made in a sterile bubble (how we would all like one of those right now!) without any thought given to others’ problems.
But much as everyone makes a noise, we know he’s never going to do away with car tax or road fuel duty and he’s never going to kill Stamp Duty Land Tax unless he replaces it with something as yet unknown but likely to be just as punitive, possibly more so.
The stamp duty holiday for properties up to £500,000 that ends on March 31 was only ever a temporary measure. As its demise grows inexorably closer, unless those pleas for it to remain really do make a difference to his planned announcements on March 3 - Budget Day this Spring - we know that stamp duty will continue.
There are the almost-annual calls for stamp duty to be replaced with something ‘better’. What better way is there to replace a cash cow that keeps on giving? Fattening it a few percentage points might be an option, sending it for slaughter is not unless it’s to provision a feast that will see an even more eye-watering scheme in its place.
Those who want stamp duty to end must be careful what they wish for. Better the devil you know, particularly when it comes to taxation.
Calls for the burden of stamp duty to fall on the seller rather than the buyer are also pointless. If there’s ever a tax bill to be paid in a transaction it’s always going to fall on the purchaser rather than the provider. Imagine VAT was to be a cost borne by retailers that couldn’t be passed on or reclaimed, would they do anything other than raise prices by the equivalent amount to recoup their losses?
Naturally, the same would also apply if stamp duty became a tax on sellers rather than buyers. Prices would adjust accordingly in much the same way as they have risen during the stamp duty holiday, if only because buyers keenly squandered their ‘saving’ by making bids that in some case went beyond asking price and often exceeded what they would have paid in stamp duty. And if the seller failed to pay, would the buyer then lose the property and their money as the deal was forcibly reversed by HMRC?
The current system may have its flaws but if it’s necessary to have a tax on property transactions then the current way is probably the best. Those who want stamp duty reform should dream on in the current fiscal circumstances.
The Chancellor has better things to think about on Budget day, such as which sofa is likely to have several hundred billion pounds of Covid funding stuffed down the back. Just hope he doesn’t think it’s yours!
*Colin Shairp is Director of Fine and Country Southern Hampshire and Town and Country Southern