The Liberal Democrats says it is exploring the possibility of implementing a progressive system for Stamp Duty should it be elected to power at the next general election.
Vincent Cable, the Liberal Democrat shadow chancellor of the exchequer, whose motto is “fairer taxation not higher taxation”, says his party not only hopes to raise the threshold of Stamp Duty but also introduce a progressive system.
This means that house buyers pay a percentage rate on the value of their homes over the threshold rather than the full value of the property.
Cable is currently working on the partys Tax Commission, which has the remit to completely update its policy on tax across the spectrum. Its report, of no more than 10,000 words, will be issued in July and go to the vote at the autumn 2006 party conference.
He says: We would like to reduce Stamp Duty on lower value properties and increase it on higher value properties. We are currently trying to establish what different structures would look like, but we firmly believe that reform is needed as the current system in inequitable and a barrier to home ownership.
Cable recently asked the chancellor of the exchequer Gordon Brown to estimate the revenue implications of restructuring Stamp Duty on seven marginal rate schemes.
Tax regime one would impose marginal rates of 0% on properties up to 124,000, 1% on properties between 125,000 and 249,000, 5% on properties between 250,000 and 499,000, and 5% on properties over 500,001. The estimated revenue for this regime is 2.4bn.
Tax regime two is identical to regime one other than that properties over 500,001 would have a marginal rate of 6%. In this scenario the estimated revenue is 2.2bn.
Tax regime three would impose marginal rates of 0% on properties up to 149,000, 2% on properties between 150,000 and 249,999 and 5% on properties between 250,000 and 499,000. Properties worth over 500,001 would also have a marginal rate of 5%, and this regimes estimated revenue is 2.1bn.
Tax regime four is identical to regime three other than properties worth over 500,001 would have a marginal rate of 6%. The estimate revenue is 1.8bn.
Tax regime five is identical to regime one other than properties worth between 125,000 and 249,000 would have a marginal rate of 2%. The estimated revenue is 1.6bn.
Tax regime six is identical to regime three other than the marginal rate on properties between 150,000 and 249,000 is 1%. The estimated revenue for this regime is 2.7bn.
Finally, tax regime seven is identical to regime six other than the marginal rate on properties worth over 500,001 is 6%. The estimated revenue is 2.4bn.