An influential think tank says the levying of Capital Gains Tax on sales would deter volatile house price rises and could be used as a substitute for stamp duty.
The National Institute for Economic and Social Research says the current system of taxing households and capital values is possibly “the worst of all worlds” and should be replaced by something clearly more fair and more transparent.
“We tax the purchase of houses by stamp duty which limits the efficient allocation of housing and labour mobility” claims NIESR macro-economic director Angus Armstrong.
“Unlike other assets the income and capital gains are untaxed. No attempt is made to tax the excess returns on housing which accrue because of its relatively fixed supply.
“Owners are happy to under-occupy, many households are buying second properties and the older generation are not releasing equity but leaving owned property towards the end of their life. This suggests the market is becoming less efficient in allocating housing on a basis of needs” says Armstrong.
He says a tax on capital gains levied annually or at the point of sale would “reduce the gains in an upturn and losses in a downturn, so dampening house price cycles.”
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Taxes, levied on a property or estate, tend to distort the market for property or estates. Applying more Capital Gains Tax here would simply be the continuation of the status quo.
We need to break away from this temptation, as doing this clearly has not worked to smooth the market in the past.
As Einstein used to explain, insanity is the continued repetition of the same experiment, in the hope of gaining new and different results.
Continuing to tax property ownership in the hope that it may smooth market peaks is one such experiment, and history tells us that this experiment has already failed, disastrously.
The best answer is to change the way houses and other property are marketed, by improving the transparency of the property market itself. My treatise on this may be found (as most of you will already know) by Googling The Hendry Solution. Happy reading!
The remedy is there, waiting.
What a ridiculous suggestion! Another quango who clearly has no understanding of the housing market. Such a suggestion will not affect second home owners - or wealthy home owners rattling in homes which are too big for them (it might even dis-incentivise them to sell). Such a move will affect ordinary working class people who will not be able to afford to move thus reducing population mobility. As for the suggestion to levy it annually - I can only assume this was written by under employed surveyors - will the government give back the tax when prices fall (as in 2008)? Anyone with an iota of common sense knows what the problem is - we have an expanding population, and more people living singly we need to build more properties - as Gordon brown said in 2007 we need 3 million more homes by 2020 - nothing new here then!
Idiots
The concept of further taxes on Primary Residencies is flawed. It would as suggested above dis-incentivise them to sell. Also a 'home' is a 'home' regardless of it's price increased and the only fair way to tax any capital growth here is when the home is no longer required i.e. Inheritance Tax, which George wants to reduce.
It appears to Tories feel the middle class have no where to turn with the Labour party is such a 'mess' and continue to push their own 'agenda' and continue to attack the aspirational middle class with increased taxes.
Never has they been such a desperate need for a strong political opposition that supports the aspirational middle class.
As also said the only solution to housing is to build more homes.
Judging by the comments here, I don't think this policy would play very well. Which means, of course, that it will definitely be introduced.
If George does this he'll alienate the rest of the voters that are left that haven't been disenfranchised by his other policies. How about getting some money out of Google rather than UK property owners please?
Jason McClean
www.thepropertyinsurer.co.uk
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