If reports that the Government is considering some type of waiver or delay in stamp duty on house purchases are true, things at Westminster must be even more desperate than they appear. As usual Chris Dillow has written the definitive piece on this, with the perfect title: "Another terrible idea". Almost all of the national newspapers think it's a crazy notion too.
Since others have covered the ground so well, let's just briefly summarise what's wrong with the idea:
1. Stamp duty isn't the problem -- lack of mortgage finance is. So cutting stamp duty won't fix anything.
2. When Norman Lamont abolished stamp duty for several months in 1992, it didn't help.
3. The Government can't afford it (though that doesn't seem to be deterring it any more).
4. It may encourage first-time buyers into a market that has further to fall before true affordability is reached. That's foolish at best, cruel at worst.
5. Unless it's strictly confined to first-time buyers, it will provide an unnecessary boost to those who don't need help -- cash buyers or buy-to-letters.
We can only hope that all of these rumours are the result of a silly season trial balloon by the Government, and that this dummkopf idea will sink without a trace. That's not to say that stamp duty is perfect, though. The fact that the higher rates apply to the entire purchase price as you pass each tax threshold is ridiculous and distorting -- income tax doesn't work like that, and neither should stamp duty. But changing that would be a sensible and thoughtful thing to do, and right now thinking and sense seem to be in short supply on Downing Street.
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