The British Property Federation (BPF) has warned the government not to raise stamp duty on commercial property.
The warning was prompted by growing fears that the Chancellor may use next week’s pre-budget report to increase the stealth tax.
In a pre-budget submission to Chancellor Gordon Brown this week, the BPF said that the Treasury should decouple commercial and residential stamp duty, so that house prices could be controlled without commercial property being affected as an asset class.
The statement accused the government of regarding income derived from property investment as “unearned income and a soft political target for further revenue raising.” However, the BPF added that the damage to the industry of four successive increases in stamp duty were only just beginning to show, as it was no longer being masked by a buoyant market.
William McKee, Director General of the BPF, said: “As the property cycle now matures, their impact is becoming more obvious resulting in the sector being fundamentally less competitive than it was four years ago.”
The submission added: “The government could abolish stamp duty on commercial property transactions with very little impact on overall tax revenue.”
In 1999/2000 commercial stamp duty raised only £1bn in revenue for the Treasury, approximately 0.3% of the government’s £382bn total revenue.
EGi News 19/11/01
