DP10063 The Incidence of Transaction Taxes: Evidence from a Stamp Duty Holiday

Author(s):	Timothy J. Besley, Neil Meads, Paolo Surico
Publication Date:	July 2014
Keyword(s):	surplus incidence, surveyor's evaluation, tax holiday
JEL(s):	H22, R32
Programme Areas:	Public Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=10063

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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