Darling fails to slay Stamp Duty beast

Every year as the chancellor dusts off the red box we face the same question - how do you solve a problem like Stamp Duty?

Mortgage Strategy has been campaigning for years to raise the minimum Stamp Duty threshold but at Budget time the debate reaches a crescendo as the mortgage industry does all it can to influence change.

Outside spiralling house prices, Stamp Duty is the biggest economic barrier to buying property but in his final Budget speech as chancellor, Prime Minister Gordon Brown made no reference to the tax.

The problem is that Stamp Duty has long been the elephant in the room – a problem that everyone recognises but nobody is sure how to handle.

Brown’s lack of commitment was strange considering the Conservatives and the Liberal Democrats laid out proposed changes to the tax in the run-up to the 2007 Budget.

The fact that it was being discussed gave us hope that the issue would finally have its day on the big stage.

But sadly, the flurry of media attention, hotly contested debates and vote-winning policies came to nothing and a year later, we are all sat in the same room looking at the same elephant, wondering when the zookeeper will arrive with the tranquilliser gun.

Sceptics may think that what’s hindering Stamp Duty reform more than anything is that the government would have to compensate for a serious decline in the revenue the tax delivers for the Treasury’s coffers – around £6bn a year. Any government looking to change the tax must be able to plug a sizeable hole in its finances.

But for many pundits, raising the threshold is a must when the average cost of property has spiralled so high. Others advocate the abolition of Stamp Duty’s so-called slab system, proposing instead an incremental model more in line with duties such as Income Tax.

Not only would this be more equitable, it would also make homes near the existing threshold more accessible to buyers as they would not be put off by the tax.

But chancellor Alistair Darling’s inaugural Budget left us feeling empty once again as it offered only a minor reform to Stamp Duty on shared ownership properties.

This is not enough, especially in the current market climate. Not until we have overhauled the format of Stamp Duty and in- troduced an incremental system will the elephant be brought under control.