Conservative MPs have called on the Government to reform stamp duty, suggesting that the threshold should be raised to £500,000.
In a Parliamentary debate on the tax this afternoon, Conservative MPs argues that the levy distorts the housing market and puts people off moving. They also suggested exempting first time buyers and linking the prices at which the rates change to house prices inflation.
Conservative MP for St Albans Anne Main led the debate and said the tax – which brought in £9.3bn last year – is seen as an “untouchable cash cow”.
She said: “Stamp duty land tax is a strong contender for the worst designed tax since the relevant rate applies to the full sale price. The Government should tackle the unfairness of paying stamp duty on ordinary homes below £500,000.
“Unless we tackle stamp duty it is going to be an ever increasing obstacle to property ownership.”
Buyers currently pay 1 per cent stamp duty on properties worth more than £125,000, 3 per cent above £250,000 and 4 per cent above £500,000. For homes worth more than £1m, buyers pay 5 per cent and since March 2012 they pay 7 per cent on properties worth £2m or more.
Conservative MP for Esher and Walton Dominic Raab said the tax raises around £43m a year from his constituency. He backed Main’s call but added the remaining bands should be linked to house price inflation.
“If the 3 per cent band had risen in line with inflation”, he said, “it would now only be levied on homes over £1.3m”.
Tory MP for Richmond Zac Goldsmith said by 2017, 96 per cent of the properties in his constituency would be in the 3 per cent band. He also said the Government should scrap stamp duty for first time buyers. “The current system makes no sense at all,” he said.
Responding for the Government, Treasury exchequer secretary David Gauke said all taxes are kept under review but that the £9.3bn stamp duty raised last year is an important source of revenue for the Government.
He said: “It is money that, frankly, we need.”