McDowell not wrong on stamp duty

Michael McDowell’s opening-up of the stamp duty debate is welcome. It isclear that certain reforms of the stamp duty regime should be considered. There are three reforms of particular significance. First, there needs to be a marginal rate of stamp duty to remove the market distortions and inequity where purchasers are paying a higher rate of stamp duty on the whole amount of a property even though it is close to the threshold of a lower rate. Second, the rates of stamp duty need to be index-linked in some way. Third, the distinction in stamp duty between new and second-hand homes should be abolished. While some caution is required on this, given the importance of the construction sector, it is not desirable that new properties are more attractive for families than second-hand homes.

Deeper debate is needed on the issue in the long term, but the problems he outlined should be addressed.

McDowell says we don’t need the money. Given the problems in our health services, our under-funded education system, and the fact that parents have to think twice, for cost reasons, before visiting a GP, I cannot agree with him. However, our tax collection must be fair, and not distort the market. McDowell may have opened the debate for self-serving reasons, it is still one worth having.