Stamp duty is a general tax imposed upon certain documents and some undocumented acquisitions. These include title transfers as a result of selling real estate, vehicles, business assets and other property; gifts; insurance policies and home loans, and is paid by the purchaser or borrower
Originally stamp duty was for documents stamped with a physical stamp. Now when stamp duty is levied, the payer doesn't even receive a stamp.
A stamp duty is a tax on transaction. It disproportionally affects people who do more transactions.
Take the example of a stamp duty of 3%
Person 1 lives in a city with a home worth 400,000. They paid 12,000 stamp duty. They live there for 30 years.
Person 2 lives in the same city and has a home valued at 400,000, but they move 3 times due to various factors such as natural change in their life, such as work, families or divorce.
Person 2 will pay at least 36,000(actually a lot more due to inflation) in stamp duty in their life for no other reason than having more natural change in their life,.
Stamp duty on property affects those with bigger families.
Bigger families would ideally want bigger properties.
When they decide to upsize, not only do they have the normal expensive costs of moving, but they have to pay for a more expensive property and they have to pay stamp duty, and the stamp duty will be bigger than that on their old property.
The money taken for stamp duty, rarely goes even partially to the roads, or street lighting, or even any benefit for the resident who paid for it.
Stamp duty is a tax on assets, this is one of the worst types of tax, as it is double taxation, but also because it is lump sum and you cannot offset your previous stamp duty costs against the current one.
The worst thing is it changes the effective tax rate of the payer to a higher amount than was planned by the national tax body. This is the tax rate that is deemed as fair.
There are 2 identical houses. One house is sold 10 times in 10 years, it will have 10 lots of stamp duty applied to it. But the other house sold 1 time in 10 years will have only one lot of stamp duty applied to it.
How can basically the same asset have two rates of tax applied?
Its possible for an asset to have so much stamp duty paid over time, that the stamp duty equates to more than the value of that asset.