Discussion paper

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

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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

Besley, T, P Surico and N Meads (2014), ‘DP10063 The Incidence of Transaction Taxes: Evidence from a Stamp Duty Holiday‘, CEPR Discussion Paper No. 10063. CEPR Press, Paris & London. https://cepr.org/publications/dp10063