Could Andy Burnham scrap stamp duty?

Stamp duty is a tax paid by home buyers on properties or land worth over £125,000, or £300,000 for first time buyers, in England and Northern Ireland.

The Institute for Fiscal Studies, an independent think tank, has described it as “one of the most economically damaging taxes”, while Kemi Badenoch said last year a Conservative government would abolish the levy on main homes.

Burnham too has been critical of the tax, instead favouring an LVT.

“The LVT, an annual tax on the market rental value of the land, would allow for the abolition of stamp duty – a tax on the aspirations of young people to put down roots and get on in life,” he wrote in the Guardian during his first bid for the Labour leadership in 2010.

In the 16 years which have followed, Burnham has repeatedly called for reforms to property taxes.

But being in favour of property tax reform and then enacting it in government when confronted with the political and practical reality are two different things.

Economists are broadly united in their contempt for stamp duty, largely because they say it penalises transactions.

“More or less any property tax or local tax is going to be better than stamp duty,” says Stuart Adam from the IFS.

“What stamp duty does is discourage people from buying and selling.”

He argues that a land tax is an efficient way of raising revenue because land is in fixed supply, visible and identifiable, and cannot leave the country.

There are no “damaging disincentive effects”, with the LVT not having an impact on behaviour at all, he says.

He adds that one of the ways to deal with the shortage of the housing stock in the country is to make the best use of what we have – and scrapping stamp duty would help with that.

“It would lead to less pressure on the housing market – less need to build more stuff,” he says.