Stamp duty levels are “crazy” and must be reversed to stop a “tax on mobility”, former Conservative Chancellor Lord Lawson has said.
Lord Lawson said Philip Hammond, the current Chancellor, should cut stamp duty in March’s Budget and increase other taxes to pay down the deficit.
The comments came after research found stamp duty reforms have slowed the housing market and raised half as much money as the Treasury predicted.
The Daily Telegraph has launched a campaign calling on Mr Hammond to address the issue of stamp duty in next week’s Autumn Statement.
Lord Lawson told The Daily Telegraph that the Treasury could learn from his time as Chancellor in the 1980s when he cut stamp duty – and revenue from the tax increased.
Lord Lawson – as Nigel Lawson – was Chancellor in Margaret Thatcher’s government from 1983 to 1989, and is credited with cutting taxes for millions of middle-class people.
He said: “When I was Chancellor I cut stamp duty substantially – and, as it happened, the revenue from the tax actually rose. But it would not be sensible to announce this in the Autumn Statement.
“It should be done in the 2017 Budget, as part of a package which will need to include increases in some other taxes, given the size of the budget deficit.
“One obvious candidate is a rise in the tax on diesel fuel to at least the level of the tax on petrol, if not higher.” Lord Lawson has also said high stamp duty rates were an “attack on mobility” and “crazy”.
He told Property Week magazine: “Stamp duty as it is now is crazy. When I was chancellor, I increased the threshold at which stamp duty applies by six times and reduced the rate to 1 per cent. I then reduced it to 0.5 per cent.
“I realise here is a huge budget deficit, but now stamp duty is so high I think if it were reduced the yield to the Treasury might actually increase.”
The study by Oxford Economics found the Exchequer received £370 million less in stamp duty than the £700 million it expected following the changes made by George Osborne as Chancellor in 2014.
The economists said it led to a steep decline in property sales and cost the economy nearly £1billion because of a reduction in people selling homes or doing jobs such as removals or renovations.
The changes to the stamp duty system have led to 1,950 fewer properties worth more than £1 million being sold and the loss of 14,000 jobs, they said.
The news came as the head of one of the UK’s biggest builders considered calling for stamp duty to be paid by sellers in order to kickstart the stalled housing market.
Pete Redfern, the chief executive of Taylor Wimpey, described stamp duty as “a charge on moving house” while Clive Fenton, chief executive of retirement house builder McCarthy & Stone, wrote to the Chancellor to call on the Government to scrap stamp duty for older people when downsizing to a smaller property.
A HM Treasury spokesman said: “Our reforms mean that almost 800,000 ordinary house buyers have already seen their stamp duty bill cut or stay the same, while tax receipts from properties costing more than £937,000 have increased.
“The system is now fairer as stamp duty is levied incrementally rather than on the whole value of the property.” Treasury sources said officials disputed Oxford Economics’ figures insisting that that they do not take into account “significant” regional variations.
A source added: “Their analysis is based Land Registry data which does not take account of stamp duty reliefs, which can be substantial, and also has a different definition of residential versus non-residential property.”