Discussion Paper Details

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Title: The Incidence of Transaction Taxes: Evidence from a Stamp Duty Holiday

Author(s): Timothy J. Besley, Neil Meads and Paolo Surico

Publication Date: July 2014

Keyword(s): surplus incidence, surveyor's evaluation and tax holiday

Programme Area(s): Public Economics

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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.

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Bibliographic Reference

Besley, T, Meads, N and Surico, P. 2014. 'The Incidence of Transaction Taxes: Evidence from a Stamp Duty Holiday'. London, Centre for Economic Policy Research.