Philip Hammond could create an economic BOOM worth £10 BILLION, according to think tank

Posted on Oct 30 2017 - 4:21am by admin

UK - HammondGETTY

The report claims scrapping the tax could create an economic boom

The tax makes £12billion a year but abolishing it in the Autumn Budget will trigger a £10billion economic boom and improve the housing market, according to the report.

The Adam Smith Institute called stamp duty the “most damaging tax in the country” because regular hikes mean home buyers pay five per cent on houses worth more than £250,000 and 12 per cent on homes worth £1.5million and more.

Stamp duty was one per cent for decades but Labour introduced a series of bands in 1997.

The Institute’s head of research, Ben Southwood, said: “One of the best things about Philip Hammond as Chancellor is a resistance to eye-catching schemes that sound good but don’t make good economic sense.

“But stamp duty is so bad that scrapping it would be both eye-catching and good economic sense.”

The report comes after a warning that big giveaways in next month’s budget, like increasing public sector pay, may force the Chancellor to abandon his plans to balance the nation’s books by 2025.

In a report today, the Institute for Fiscal Studies warns that a slowdown in economic growth has slashed the Treasury’s budget.

IFS economist Thomas Pope said: “The first Budget of a new Parliament is often the best chance a Chancellor has to set out his stall.

“Mr Hammond, though, has been dealt a very tricky hand indeed. It looks like he will face a substantial deterioration in the projected state of the public finances.”

Earlier this month, sources claimed the Chancellor is preparing a big cut in duty just for young buyers struggling to get on the property ladder.

It would be one of a series of proposed measures to help people in their 20s and 30s.

It comes as Mr Hammond has been criticised for proposed plans to slash pension tax relief for older workers to fund a wave of cuts for those in their 20s and 30s.

A research paper published by the House of Commons has outlined the Government’s plans to reform pension tax relief, with those in the last years of their employment in the firing line.

Pension tax relief is the top-up paid to pension savers by HMRC.

For every £80 a basic rate taxpayer saves, the Treasury pays £20, or 20 per cent.

Higher rate taxpayers, or those paying 40 per cent income tax, get an even better deal.

UK - ChancellorGETTY

Sources claimed the Chancellor is preparing a big cut in duty for young buyers

For every £60 they pay into a pension, the Revenue tops up the fund by £40.

For additional rate taxpayers, or those paying 45 per cent, the amount rises to £45.

However, these payouts are costing the Treasury billions of pounds a year.

In 2015/16 the Government said it paid £38.2billion in tax relief, with nearly half going to higher rate taxpayers and 12 per cent to additional rate tax payers.

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Labour introduced a series of bands in 1997

In an effort to cut this bill, Mr Hammond is thought to be considering levelling pension tax relief to 20 per cent for everyone in his upcoming Budget by slashing the amount older workers can claim on their contributions.

The Chancellor will release the plans of his Autumn Budget on Wednesday, November 22.

It is the first time the budget will be released in the Autumn as it was previously released in the spring.

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