With public finances collapsing, the chancellor may think this the last time to give away money. But it is because tax revenues are falling that he can afford to waive the taxes he is not receiving anyway.

Many people have called for a cut in stamp duty on house purchases but mainly for their own vested reasons – housebuilders desperate to clear stock, for instance. Yet this is a tax Alistair Darling can afford to ease.

He received more than £6bn from homebuyers last year and is banking on receiving it again this year. He will not get the money however. If there are half as many transactions in 2008 he will receive half the tax, and if prices are down 10 per cent, his yield will be just 45 per cent of expectations.

At that rate, abolition would cost little more than the £2.7bn he rustled up to extricate himself from the 10p income tax debacle.

Not that he needs to abolish the tax on all property purchases.

It is currently paid at 1 per cent on homes costing more than £125,000, 3 per cent above £250,000 and 4 per cent on £500,000-plus homes. Abolishing the 1 per cent band would help most first-timer buyers and bring new money into the market that would pass up the ladder as people selling their homes to first-timers trade up.

If there is a credit shortage too, then Darling already has a mechanism for injecting government debt into mortgage lenders to allow these first-timers to buy.

Why stamp duty more than any other tax? Not only because home ownership is a sentimental market that generates political popularity but also because it genuinely stimulates economic growth. Cutting fuel duties puts cash back in motorists’ pockets but housebuying has a multiplier effect that results in further spending on capital items such as carpets and furniture, providing wages that are spent in the wider economy.

Each pound of tax forfeited results in several pounds of expenditure.

But when should Darling do this? He needs to call the housing market so that he stimulates a latent demand. At present he would not only be going against the tide he would be encouraging first-timers to buy an asset that is falling in value – and there are no votes from people induced into negative equity.

So tempting as it is to act quickly, this is probably a measure for the Spring 2009 budget, not the 2008 pre-budget statement. And he must not give advance warning: that would freeze an already flat market as buyers waited for the start date.

Nor should it be a temporary stamp-duty holiday. He cannot afford to see the market go flat again after a short-term rush. But if the stimulus works, the higher prices and increased volumes will generate extra tax to offset the cut.

It is a measure that would be cheap, popular and might well keep the economy out of recession. In desperate times it is worth a try.

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