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

Besley, T, Meads, N and Surico, P (2014) The incidence of transaction taxes: Evidence from a stamp duty holiday. Journal of Public Economics, 119 (Nov.). pp. 61-70. ISSN 0047-2727

Abstract

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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