The Labour Government is being urged to scrap "one of the worst taxes" levied on property purchases as the Treasury rakes in billions amid the housing crisis.
MPs have decisively rejected a Conservative motion to scrap stamp duty on primary homes, with 329 votes against and 103 in favour, delivering a majority of 226.
The opposition day debate saw heated exchanges between Shadow Chancellor Sir Mel Stride and Chief Secretary to the Treasury James Murray over the proposed tax abolition.
As part of the proposals, Conservative MPs called for reduced Government spending to finance the elimination of stamp duty land tax for UK residents purchasing their main homes.
Labour is being urged to scrap 'the worst tax'
|GETTY
The debate occurred ahead of Chancellor Rachel Reeves's Budget announcement scheduled for November 26, with Treasury expected to confirm tax rises to plug the £20billion hole in the public finances.
Shadow Minister Sir Mel Stride mounted a vigorous defence of the stamp duty abolition plan, characterising the tax as "one of the worst taxes in our tax system" that "stands in the way of younger people getting onto the housing ladder".
He argued the levy "gums up" the housing market, citing former Institute for Fiscal Studies director Paul Johnson's assessment.
Mr Stride emphasised how the tax discourages labour mobility, stating: "It stops people moving to where the work is, to get better jobs to further themselves."
Shadow Chancellor Mel Stride | GETTYThe Conservatives proposed financing the abolition through £47billion in Government spending reductions, including £23billion from welfare budget savings.
Treasury minister James Murray launched a scathing attack on the Conservative plan, branding it "half-baked" and warning that "the ghost of Liz Truss is here today because the economic recklessness that the former prime minister embodied is back in front of us in this chamber today".
Mr Murray challenged Sir Mel's credibility on welfare savings, noting: "What I find impossible to believe from the party opposite is we now have a Shadow Chancellor claiming to have a plan for £23 billion of welfare cuts when he himself was the work and pensions secretary, presiding over the biggest increase in welfare spending in decades."
The Treasury minister acknowledged stamp duty's unpopularity, conceding: "Let's be honest, stamp duty is hardly a popular tax."
However, Murray stressed that the tax generates approximately £13.9billion annually for the Treasury, warning "there is, of course, no cost-free way of doing this".
Cross-party MPs expressed mixed views on the proposal. Labour's Chris Curtis called stamp duty a "dreadful tax" but argued any changes must form part of comprehensive reforms addressing council tax.
Liberal Democrat deputy leader Daisy Cooper agreed the tax has "all the hallmarks of a bad tax" whilst noting its substantial revenue would require alternative sources.
Tom Clougherty, the executive director of the Institute of Economic Affairs, previously said: "Abolishing stamp duty is the single best reform any government could make to Britain's tax system.
LATEST DEVELOPMENTS:
The current stamp duty framework requires buyers in England and Northern Ireland to pay tax on properties exceeding £125,000 | GETTY"As things stand, this outdated and uneconomic levy is wreaking havoc on our already troubled housing market – by deterring sales and depressing house-building.
"Indeed, research suggests that the wider social and economic harms are equivalent to three-quarters of the revenue raised – and that's on top of the loss to the people actually paying the tax.
"This means that stamp duty is many times more damaging, as a source of revenue, than broad-based taxes on income and consumption.
"Any proposal to permanently cut or abolish it is therefore extremely welcome."
More From GB News