The OECD makes sense this time
This not being something we can always say, that the OECD’s economic prescriptions make sense. But - horrendous no doubt - cynicism about international economic bureaucracies aside, this does indeed make sense:
Stamp duty should be cut permanently as part of a radical post-Covid overhaul to boost investment and make it easier for people to move to new jobs, according to the Organisation for Economic Co-operation and Development (OECD).
Transactions taxes are always contra-indicated given their high deadweights. A tax upon the geographic mobility of the population will increase the unemployment rate, as much research has proven.
Another point that we have made in the past:
Britain has the highest property taxes in the developed world, raking in £91bn in the pre-pandemic year of 2019. It means 12pc of government revenues come from hitting residential and business property owners, roughly twice the average of the OECD’s 37 member countries.
The UK does gain a large portion of revenue from property taxation already. Property being a very good place to get revenue from but just not through the medium of a transactions tax.
But it is this which is the big lesson, rather than just the technical detail:
The group wants all rich economies to become more flexible to encourage a stronger rebound as industries are reshaped by Covid and lockdowns. This could include making it easier for workers to find new jobs, and for entrepreneurs to set up new businesses.
This is the free market, even laissez faire, argument. If and when factors in the economy change then the economy itself must. We currently face significant change - working from home, online instead of physical retailing, many face to face services are at least disrupted now if not likely to have difficulty coming back. Such changes in what is possible, what is desired, mean that we must have flexibility to explore how best to accommodate those changes. Factors of production must be mobile across sectors, companies and yes, geography.
Entrepreneurs must be able to set up to test those new ideas. Equally, it must be simple to close down the experiments that don’t work - which will be many to most of them. All of this needs to be free of permission seeking from a hidebound and sluggish bureaucracy or other permit gaining system. We also don’t need national conversations about a plan for all to follow - we face far too much uncertainty for planning to be possible, we must experiment.
It is precisely during periods of change that the free market system comes into its own. An entirely static universe could, potentially at least, be planned and administered. One where what we can do, what we want to do, is in flux cannot be.
Of course, the laissez faire argument goes on to point out that the world is always in flux, technology does march on, tastes change. Therefore it is always necessary to have that freedom to experiment. It is just more true now given that we’ve that significant bolus of change thrust upon us by Covid, lockdowns and the acceleration of underlying changes.