Budget 2006 comment

And so another Gordon Brown budget is presented to us. He is pleased to be in a very select club of Chancellors who have managed 10 consecutive budgets but the whole affair becomes less successful and more predictable as each one passes.

The early leaks of many of the measures and then the smoke and mirrors presentation of the economic figures to dress them up in a favourable light.

Yet again we have massive budget deficits during a time of growth and now that the effect of the past stealth taxation is being felt by everyone, the economy is slowing and hardly even managing the lowered growth forecasts. But still never mind Gordon is sure that despite the growth of the public sector at the expense of the wealth producing private sector, growth will pick up again and even manage 3% in a couple of years.

Anyway it was a budget with virtually no news for the property sector:

• Land will be released from public ownership for housing – already announced.
• The Government will fund the construction of 100,000 new affordable houses – are these new numbers or those already funded through the grants to housing associations?
• The Stamp Duty threshold will be increased by £5,000 to £125,000 – big deal!

On the subject of Stamp Duty, this is one of the most unfair taxes we have. Unlike other taxes it is neither at a flat rate like VAT, nor is it progressive like Income Tax, nor is the threshold tax free once passed like Capital Gains Tax.

When you pass £125,000 you pay the full rate on the whole sum. Again the same situation exists when you pass the next threshold at £250,000 and the tax rate jumps from 1% to 3%.

Perhaps at some stage some Chancellor will get to grips with this and reform the tax, then we can enjoy a housing market that is not distorted by this iniquitous tax.


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