The yield from stamp duty makes a very significant contribution to overall tax revenue. Concessions in this area can be entertained only where there are likely to be considerable social and economic benefits involved. The stamp duty relief for new houses provides a valuable boost to building activity, thereby helping to maintain and increase employment in the construction industry. The relief also has the effect of reducing the real price of housing generally. I should add that, because second-hand houses are normally sold by individuals in their private capacity, they are generally not subject to VAT, whereas new houses sold by builders in the course of their trade are subject to VAT.
I am satisfied that the stamp duty relief for new houses helps to further important social and economic objectives and that, in the overall context, the tax code does not unduly discriminate against second-hand houses. Applying the rates of stamp duty on a successive tranche basis would not be appropriate in the present circumstances. Such a measure would cost in the region of £20 million a year, with little or no impact on job creation.