Liz Truss will reportedly announce plans to cut stamp duty property tax in the government’s mini-budget this week in an attempt to drive economic growth.
The Times said that chancellor Kwasi Kwarteng is planning to announce a cut in the levy alongside already announced moves to reverse the national insurance hike and axe the planned increase to corporation tax.
Two Whitehall sources told the newspaper that cutting the property tax was the “rabbit” in Kwarteng’s financial statement.
Downing Street refused to comment.
If it does go ahead, the move is likely to fuel concern about increasing inflationary pressure at a time when the rate hovers around 10%.
But the Conservative leadership will argue a vibrant housing market can underpin their growth plan.
It’s also less than a year since the last stamp duty discount ended.
In July 2020, as the economy was choked by the pandemic, then chancellor Rishi Sunak announced there would be no stamp duty to pay on property purchases up to £500,000.
The duty “holiday” was then tapered to £250,000, before reverting to its normal level of £125,000 in October last year.
On Tuesday, Truss said she is willing to be an unpopular prime minister as she admitted her tax cuts will disproportionately benefit the rich.
The new Tory leader also effectively confirmed a plan to scrap the cap on bankers’ bonuses as she argued she needs to make “difficult decisions” under her gamble to go for growth.
But as she was speaking, Joe Biden tweeted criticism of the type of economic policy she was advocating – a day ahead of their meeting at the United Nations summit in New York City.
“I am sick and tired of trickle-down economics. It has never worked,” the US president said.
His criticism was meant for a domestic audience, but it underlined the differences between the two leaders’ stances just as Truss says she wants to foster closer ties with international allies.
Truss was asked during a round of broadcast interviews on the 102nd-floor observatory of the Empire State Building if she is prepared to be unpopular.
“Yes. Yes, I am,” she replied to Sky News.
“What is important to me is we grow the British economy because that’s what will ultimately deliver higher wages, more investment in towns and cities across the country. That’s what will ultimately deliver more money to people’s pockets.
“In order to get that economic growth, Britain has to be competitive. If we put up taxes, if we have arbitrary taxes on energy companies, if we have high corporation tax, we’re not going to get that investment and growth…”
She insisted the cost to the taxpayer of her energy package, being paid for by borrowing rather than a windfall tax on the profits of energy and oil giants, is “not what has been projected”, with estimates as high as £150 billion.
The Resolution Foundation think tank has said Truss’s tax plans and energy support will see Britain’s richest households getting twice as much support with living costs as the poorest households.
Truss accepted the benefits would fall in favour of the rich – at least initially – but rejected claims of unfairness as she bet on growth trickling down to the rest of society.