Stamp Duty Land Tax
Debate between Chris Curtis and Graham Stuart(3 days, 14 hours ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Curtis
I will make some comments about the unfairness of the council tax system in a moment. We can have a conversation about tax and spend, and there is a much wider conversation to have, but today’s debate focuses on a very specific cut in a very specific part of property taxation, and there is a problem with having that conversation in isolation, rather than having the bigger, bolder, politically braver conversation that I would like the Opposition to start about wider reforms of our property tax market.
Graham Stuart
I must say that I am encouraged by the hon. Gentleman’s speech. For once, he is not purely engaging in the “14 years of failure” rhetoric of the Labour party. He recognises that stamp duty is a bad tax, and he says that we need a proper, joined-up and deeply-thought-through approach to getting rid of it. Is he pledging to lead such an operation in the Labour party? Given that for the next four years there will be 400-plus Labour MPs, the debate within his party is more important than the one within ours.
Chris Curtis
I am glad that the right hon. Gentleman has asked me to comment on the 14 years of Tory failure—years in which his party failed to grow the British economy and created a number of the problems that the country faces. While the shadow Chancellor made many good remarks in his opening speech, there was a little bit of amnesia about the state of affairs that was left to this Government. However, we do need an honest conversation about tax reform, including reform of property taxes.
We have spoken a little about what the Institute for Fiscal Studies has said, and the IFS is right. The UK essentially relies on two big but fairly broken property taxes. Council tax does not create the distortions that stamp duty creates, but it is regressive; stamp duty creates distortions, but it is at least progressive, and mitigates some of the regressive elements of council tax. If we look at only one half of the equation and simply cut stamp duty, we will tilt the system further in favour of the wealthiest households, many of them in London and the south-east, while telling lower and middle-income families elsewhere that there is nothing in the system for them.
We should consider just how unfair council tax has become. Given that the top band is capped so lightly, the bill for a modest family home in the north or the midlands can be similar to that for a multimillion-pound townhouse in London. Paul Johnson, formerly of the IFS, has already been quoted, but let me read out a tweet from him:
“Buckingham Palace, valued at around £1bn, sits in band H and is charged £1,828 by Westminster City Council, less than an average three-bedroom semi in Blackpool...46% of households in England will receive a bigger council-tax bill than the Palace.”
That is clearly a broken tax system, and if we ignore that and focus solely on stamp duty, we will only make things worse.
Moreover, because successive Governments have not had the bravery to revalue, the tax bands are still based on 1991 values. In 1991, Tim Berners-Lee had just invented the world wide web, Nirvana had just released “Nevermind”, Will Smith was filming the first series of “The Fresh Prince of Bel-Air”, and I had not been born. A lot has changed since then, yet we have still not reformed the way in which we carry out council tax valuations. So yes, I agree that we should set a path to reducing stamp duty and ultimately reform the way in which we deal with it, but that should be part of a broader package that shifts tax away from transactions and towards ongoing occupation of higher-value properties. It could include revaluation and re-banding of council tax, so that bills reflect today’s values. There could be a higher rate or surcharge for the most expensive properties, and targeted reliefs to support downsizers and first-time buyers.
Graham Stuart
The hon. Gentleman is giving a brilliant speech, I must say, and given the energy that he is bringing to it, it “Smells Like Teen Spirit” to me. I agree with most of the points that he made about council tax. It is outrageous what we see when we compare the tax on a small flat in Beverley with that on a multimillion-pound apartment in Westminster. Does he recognise that the cut in business property relief will impose huge costs on businesses, such as house builders, one of which I met last week? If that business was worth £100 million, say, on the death of the owner, the tax would be £20 million, and the person inheriting the business would have to extract £40 million in order to pay it. That house builder told me that for every £40 million taken out of the business, there would be £120 million of investment not made in housing. Does the hon. Gentleman accept that that is a real problem?
Chris Curtis
With respect, I think that I have already taken the debate a little bit away from stamp duty, and I do not want to go into the wider tax system—although, as I have said, it is important to broaden the debate and engage in a wider conversation about property taxes, as I have tried to do. If the Opposition genuinely want to remove stamp duty, I invite them to engage in that wider conversation in good faith. If we want to remove costs at the point of transaction for those buying high-value homes, it is only fair to ask them to contribute more through day-to-day charges. Such a system would be fairer, would support mobility, and would meet the objectives that I think are shared by Members on both sides of the House: a housing market that works, more building, and a tax system that is both pro-growth and fiscally responsible.