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The incidence of transaction taxes: evidence from a stamp duty holiday

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  • Besley, Timothy
  • Meads, Neil
  • Surico, Paolo

Abstract

This paper exploits the 2008–09 stamp duty holiday in the United Kingdom to estimate the incidence of a transaction tax on housing. The average reduction in the after-tax sale price is found to be around £900 against the backdrop of an average tax reduction of about £1500. While we estimate an increase in transactions of properties affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions. The findings are calibrated to a simple bargaining model to show they imply that about sixty percent of the surplus generated by the holiday accrued to buyers.

Suggested Citation

  • Besley, Timothy & Meads, Neil & Surico, Paolo, 2014. "The incidence of transaction taxes: evidence from a stamp duty holiday," LSE Research Online Documents on Economics 59637, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:59637
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    1. Wojciech Kopczuk & David Munroe, 2015. "Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 214-257, May.
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    More about this item

    Keywords

    tax holiday; surplus incidence; surveyor's evaluation;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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