Cut stamp duty to boost employment says OECD

January 21, 2011 4:37 PM

The influential Organisation for Economic Co-operation and Development (OECD) has called for stamp duty to be scrapped, arguing that the tax on home sales stops people moving homes for employment and leads to higher unemployment. The group has claimed that stamp duty is so harmful that we would be better off even with a revenue-neutral policy which raised other taxes by the same value of lost revenue to the Treasury.

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There are many factors which lead to unemployment and stamp duty is just one the causes of low labour mobility. The Paris-based group also criticised directly-provided social housing (as distinct from providing housing allowances) for concentrating “low income households into neighbourhoods with negative consequences for access to education and labour market outcomes” and planning policies, observing that “new housing supply responsiveness tends to be lower in countries where it takes longer to acquire a building permit.” The stance on Stamp Duty Land Tax (SDLT) is clear:

“lower mobility among owner-occupants than renters is likely to be because owners face higher transaction costs when moving house. They thus tend to move house less often in order to spread these costs over a longer time period. On average, an owner without a mortgage is estimated to be 13% less likely to move every year than a private renter.”

“Transaction taxes are inefficient for raising revenue as the same tax revenue could in principle be obtained at a lower economic cost by taxing consumption instead.”


SDLT is levied at a time of great stress. Moving house is often said to be one of the most stressful life events and certainly a time of great change and upheaval. It’s no wonder people are more reticent about moving if they’re home-owners and have to pay a large amount of tax for the privilege. Britain needs a simpler tax system and lower taxes. Policy makers should listen to the OECD and consider abolishing stamp duty on homes and business premises.

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