June 20, 2008
The Treasury, the Lord and the missing £5bn
I’ve been wondering for a while now how much the shortfall in stamp duty will be this year, given that house sales could be down 40 per cent and prices 10 per cent.
Lord Oakeshott, the Lib Dem Treasury spokesman for the Lords, has an estimate of £5bn, down from £10.1bn in 2007/8:
To put this in perspective, it’s almost DOUBLE the £2.7bn cost of compensating the abolition of the 10p tax band.
True, the Treasury did forecast in the Budget that stamp duty receipts would fall…..by about 5 per cent, not 50 per cent. Soon we’ll see who is right.
Oakeshott makes the astute point that as property prices fall, buildings enter lower stamp duty bands, accentuating the effect.
You might argue that the Treasury will be compensated by rising oil prices, which result in higher VAT at petrol pumps and more North Sea Oil tax. Unfortunately, officials were knocking down this theory a few weeks ago (see Blogs passim).
