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

• Temporary and unanticipated tax holiday on property transactions in the UK
• Surveyor's evaluations to construct treatment and control groups
• 8% increase in transaction volumes, reversed after the policy was withdrawn.
• 60% of the surplus accrued to the buyers.

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affected by the tax holiday around 8%, most of this effect appears to have reversed rapidly after the policy was withdrawn, suggesting mostly a short-term retiming of transactions.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