The Government may have suffered a few self-inflicted wounds on the tax front in recent months but floating the idea of suspending stamp duty for homebuyers is a brilliant wheeze. It is just what is needed for the frozen property market and the broader economy – though not in quite the way it might appear.

On the surface, there appear to be some slight snags. Stamp duty is a big cost in house purchases, particularly at the top of the market. For a £1 million house, it is a far from trivial £40,000. Other things being equal, lifting the tax might well encourage potential purchasers to buy now rather than wait.

But, of course, other things are very far from equal. For many first-time buyers the issue is irrelevant. They simply cannot get a mortgage or, if they can, it is eyewateringly expensive.

Even if rates were cheaper, potential purchasers would be reluctant to buy now when they are being told that prices could be 8 per cent lower in a year’s time. A tax holiday worth 4 per cent would make little difference, let alone 1 per cent. Still, at least the Government would look as if it were doing something about the slump in housing turnover that is having a serious impact on the economy. For the Government, the beauty of the stamp duty freeze is that, though probably ineffective, it would also be relatively cheap.

Stamp duty on home purchasers brought in an estimated £7 billion in the last financial year. That is a very significant sum for a Government scrabbling for every penny. But the collapse in housing sales will wipe out most of that. The yield this year could easily fall below £2 billion. That would be much more possible for the Government to live without.

All this assumes that the Government is serious about the idea, which must be in doubt. A freeze on stamp duty may be like the windfall tax on energy, another idea floated by Government only to be torpedoed days later.

But the genius of leaking the plan is that it may have more impact than actually carrying it out – though in the opposite direction. Potential homebuyers will now surely defer any purchase in the hope that the tax will indeed be suspended. This will ensure that the housing market grinds to a halt and prices fall even faster. That, of course, is a good thing, as the faster prices find a floor the quicker the recovery can start. And who said Gordon Brown had lost his touch?

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