- The Centre
- Press releases
- Related Activities
- Contact us
My research project is funded by the Welsh government, which is undertaking economic research to support the development of a new Welsh Tax on Transactions Involving Interests in Land (WTIIIL), to replace the current UK Stamp Duty Land Tax (SDLT) in Wales.
The first chapter, “Evaluating the Impact of Stamp Duty Land Tax Across the Regions”, now includes an analysis of the impact of the tax holiday policies from September 2008 to December 2009, and from December 2014 to May 2015, across the regions (excluding Scotland, but including Wales, Greater London, and the other regions). This is the first piece of research which has analysed these tax holidays. The regression analysis also includes the growth rate of GDP and the unemployment rate as new indicators of macroeconomic conditions. The results show that the market in Wales may be more sensitive to the government policy than those in London and the rest of the UK. This implies that greater care is required when formulating a devolved tax policy.
The second chapter will focus on “Evaluating the Impact of Tax Devolution on Stamp Duty Land Tax Across Scotland”. The economic and tax devolution conditions in Wales are similar to the situation in Scotland. In order to understand what will happen in Wales, this chapter will include more dummy variables to take the place of the real economic indicators, and more interaction tests. The results show that the markets in country regions may be more sensitive to the government’s policy than those in metropolitan areas, such as Edinburgh and Glasgow. Finally, focussing on bands using the notches and optimisation frictions approach showed the current tax policy to have a positive influence compared with the past one, which just followed the existing policy in UK. The impact is reflected in the macroeconomic indicators, which include the level of new housing building and the level of GDP.
The next step will be to use the bands and the deduction of the notch and optimisation friction model to find the optimised tax rate and tax notching for the new SDLT in Wales (WTTIIL), which will balance the housing market development and the government budget.