Arthur takes a look at possible uses for the new revenue that has been generated by stamp duty.
The increase in stamp duty proposed by George Osborne in 2014 was met with a myriad of controversy. However, it is hard to deny its efficacy; in 2015-16, the year after its introduction, the amount of stamp duty in London collected increased by 11%. Similarly, 2016-17 had a strong increase. This is demonstrated by gross receipts from the tax on transactions of residential and commercial properties hitting £11.7bn in this year, up from £10.7bn the year prior.
Currently, the Government have complete control of revenue from the tax. Sadiq Khan, however, proposes that he should be given control of stamp duty revenue for London. This he argues will help him resolve the housing crisis – indeed, he likened his lack of control over revenue to fighting with one hand tied behind his back. This is a view that is not just supported by Sadiq Khan, but economists as well. Tony Travers, director of LSE London, discussed its importance whilst also stating further control should be given with regards to setting the tax. Tony argued that by giving increased powers to the London mayor, it would allow for increased specificity with the rate.
This proposition suggested by Sadiq represents an interesting prospect. Devolving power with regards to setting tax rates could provide a real solution to the housing crisis. Local assemblies or politicians have a better understanding of demographics and taxation attitudes than Westminster, and devolving power could increase revenue by allowing more appropriate tax rates being levied. The treasury has, however, ruled this out for the time being. That said, it is something the government should consider.