Table 6: Stamp duty Marginal excess burden comparison — Stamp duties on conveyances MEB ($) 0.72 Baseline Sensitivities: Parameters governing firm behaviour Economic rents 0.98 Low rent 0.64 High rent share Foreign ownership of firms 0.72 Low foreign ownership 0.72 High foreign ownership Capital mobility 0.66 Imperfect capital mobility Profit shifting 0.75 Low profit shifting 0.69 High profit shifting Structuresland substitution elasticity 0.10 Low elasticity High elasticity 1.15 Capitallabour substitution elasticity 0.69 Low elasticity 0.75 High elasticity Sensitivities: Parameters governing household behaviour Labourleisure ratio (N:L = 2:1) 0.85 Medium (N:L = 1:1) 0.99 Low (N:L = 1:2) Consumptionleisure substitution elasticity 0.38 Low elasticity 1.17 High elasticity Consumption good substitution elasticity 0.58 Low elasticity 0.84 High elasticity Savings decision (fixed domestically owned capital stock) 0.72 Fixed saving rate Literature estimates 0.34 KPMG (2010) 0.80 KPMG (2011) 0.71 Independent Economics (2014) Source: KPMG (2010), KPMG (2011), Independent Economics (2014) and Treasury estimates. Our central estimate of the marginal excess burden for conveyancing duties is broadly similar to estimates reported by KPMG (2011) and Independent Economics (2014). This reflects the fact that these earlier studies also treat conveyancing stamp duties as a tax on OTCs. In contrast, KPMG (2010) reported a lower marginal excess burden of 34 cents, but with a caveat that this was an underestimate because the model only captured the impact of conveyancing duties on prices (and not the frequency of transactions).
Table 6: Stamp duty — Marginal excess burden comparison Stamp duties on conveyances MEB ($) Baseline 0.72 Sensitivities: Parameters governing firm behaviour Economic rents Low rent 0.98 High rent share 0.64 Foreign ownership of firms Low foreign ownership 0.72 High foreign ownership 0.72 Capital mobility Imperfect capital mobility 0.66 Profit shifting Low profit shifting 0.75 High profit shifting 0.69 Structuresland substitution elasticity Low elasticity 0.10 High elasticity 1.15 Capitallabour substitution elasticity Low elasticity 0.69 High elasticity 0.75 Sensitivities: Parameters governing household behaviour Labourleisure ratio (N:L = 2:1) Medium (N:L = 1:1) 0.85 Low (N:L = 1:2) 0.99 Consumptionleisure substitution elasticity Low elasticity 0.38 High elasticity 1.17 Consumption good substitution elasticity Low elasticity 0.58 High elasticity 0.84 Savings decision (fixed domestically owned capital stock) Fixed saving rate 0.72 Literature estimates KPMG (2010) 0.34 KPMG (2011) 0.80 Independent Economics (2014) 0.71 Source: KPMG (2010), KPMG (2011), Independent Economics (2014) and Treasury estimates. Our central estimate of the marginal excess burden for conveyancing duties is broadly similar to estimates reported by KPMG (2011) and Independent Economics (2014). This reflects the fact that these earlier studies also treat conveyancing stamp duties as a tax on OTCs. In contrast, KPMG (2010) reported a lower marginal excess burden of 34 cents, but with a caveat that this was an underestimate because the model only captured the impact of conveyancing duties on prices (and not the frequency of transactions).
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