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

Journal of Public Economics

Economics

Journal of Public Economics 2014 November Vol 119 p 61-70

Besley T; Meads N; Surico P

Paolo Surico

2014

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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

tax holiday; surplus incidence; surveyor's evaluation

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