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Welsh Tories Pledge Stamp Duty Cut

by Amanda Banks,, London

14 February 2014

The Conservative Party in Wales has pledged to scrap Stamp Duty on residential property purchases of up to GBP250,000 should it win the next National Assembly election in 2016, as part of a plan to "make Wales a nation of home owners and a place of low tax."

Currently, stamp duty of 1 percent is imposed across the UK on properties that are sold for more than GBP125,000, rising to higher rates above GBP250,000. However, the devolution of some tax-setting powers to Wales means that the Welsh Assembly will soon have the ability to set the rate independently from Westminster.

Welsh Conservative leader Andrew Davies explained that salaries in Wales are lower than the UK average, while rents are more expensive, and that for many people "the property-owning democracy" that he said was "one of Margaret Thatcher's lasting legacies" remains unreachable. He said that the cost of the cut would be GBP20m, but argued that the tax take would rise due to increased economic activity.

Davies and Shadow Finance Minister Paul Davies also cited a report from last year by Henrik Kleven and Michael Best of the London School of Economics which suggests that when stamp duty is reduced by 1 percent, sales can increase by 20 percent within a short period.

However, the current Welsh Labour Government said that the cut would actually cost GBP25m, and that combined with Conservative income tax plans the Welsh Government would be worse off by GBP225m. The Welsh Government also challenged the Conservative-led coalition Government in Westminster to introduce the cut across the UK now if the party favors such a policy.

In December, the Welsh Political Barometer, which is a collaboration between ITV Cymru Wales, the Wales Governance Center at Cardiff University and YouGov, found that Labour is currently on track to receive 43 percent of the vote in 2016, while the Conservatives are likely to get just 19 percent.

TAGS: tax | real-estate | United Kingdom | tax thresholds | stamp duty | tax breaks | revenue statistics

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