Thursday, 14 November 2019

What's wrong with leaving the tea bag in the cup?

Boris Johnson got grief for doing this, but as he says himself, "‘This really is how I make my tea. ‘It lets it brew and makes it stronger."

I usually pour in the milk before removing the bag so that I can see whether it looks strong enough; if  it doesn't, I leave the bag in and take it out when it does (or add more hot water and milk). I also do it if there's no spoon handy or tea bags are running low.

Putting milk in first before the hot water, now that is weird.

Tuesday, 12 November 2019

"University to be turned into student housing"

OK, The Daily Mash is exaggerating, but there is a lot of truth in this.

The student's landlord makes a lot more profit than the universities they attend, who, taken as a whole together with Student Loans Company and the taxpayer, probably make a cash loss (which is fine, as long as higher education benefits society as a whole).

The Lad is now in halls on campus (two minute walk from front door to lecture theatre or laboratory block), cost £5,000 a year rent plus £9,250 tuition fees, and I'd rather the university makes the profit (or taxpayer takes a smaller loss) than some slumlord cashing in on owning something near a university.

But the university might as well just charge an all-in-price of £14,250, like at boarding school, where the fees cover education and accommodation, and have done with it.

"Sweden's 100 explosions this year: What's going on?"

Headline by the BBC.

Everybody is totally baffled, as am I. Stumped. The whole thing is a mystery.

Monday, 11 November 2019

Classic Telegraph lies and propaganda

The Telegraph runs with the wildly misleading headline "New council income tax is best way to plug multi-billion pound gap in social care, says IFS". The Telegraph's motto is, of course, anything but Land Value Tax or reforming Council Tax. The linked IFS page says nothing of the sort, it just mentions it as a possibility.

Digging a bit further, IFS' own press release on the topic, from March this year, pokes gentle fun at their own report:

But implementation would mean overcoming some important challenges

A local income tax would raise significantly more in some areas than others. We estimate that revenues per person from a flat-rate tax across all tax bands would be more than six times higher in many richer parts of west London than in areas like Hull and Leicester.

A system to redistribute revenues between councils would be required in order to avoid this translating into huge disparities in funding for local services.

To sum up, it would end up as a 1% increase in the national rate of income tax. So not a 'local income tax'.

Income tax rates that varied across areas would be more complex for employers, taxpayers, and HMRC to deal with. Up-to-date records on where taxpayers live – which, at present, employers and HMRC don’t always have – would be needed.

Anything but a national tax hike would be administratively unworkable, in other words. Whatever the merits of a tax (and this has none), it has to be at least administratively workable. If it isn't, then that's usually a clue that it's a fundamentally terrible idea in the first place.

Other options for tax devolution come with more significant drawbacks though

Local corporation and value added or sales taxes would be much more difficult to administer and comply with. Moreover, differences in tax rates across councils would be more likely to distort taxpayers’ behaviour than they would for income tax.

Stamp duty land tax is much more unequally distributed – varying by a factor of more than twenty between richer parts of West London and places like Hartlepool and Blackpool. It is also a bad tax that should be abolished rather than entrenched via devolution.

Agreed to all that.

Substantial new powers over council tax, such as the ability to carry out local revaluations, could pose problems for the system of redistributing funding between councils...

Agreed. Drum-roll please...

It would be better to revalue and reform council tax at a national level – something which is overdue.

In other words, The Telegraph is claiming the IFS said pretty much the diametric opposite of what the IFS actually said.

Sunday, 10 November 2019

Fun With Numbers

From The Daily Mail:

Why it pays to do maths A level: Analysis shows qualification adds £6,000 to a salary in just six years compared to geography or biology

So, if a child is considering whether to do A-Levels, and if so which subject, they should choose Maths?


To a large extent, this is confusing cause and effect and ignoring self-selection.

Some people are more numerate than others; and those who are are, are more likely to earn more . Either because their job required advanced numeracy (very few jobs, if truth be told); because numerate people are more likely to be more efficient and hence be promoted; or because they are clued up enough to choose a job/career that will pay more in the long run (so they waste a few years studying or doing a low-paid apprenticeship in exchange for higher pay later on).

People who are numerate are also more likely to do a Maths A Level, obviously, even though the maths involved is insanely arcane and probably only of use in 0.1% of jobs.

So... numerate people are more likely to end up in higher paying jobs. They will be over-represented among applicants (which they would have been anyway); will be slightly better at them (as they would have been anyway); and employers will tend to prefer applicants who have done 'hard' A-Levels (however pointless, and as much as I love numbers and maths, even GCSE is way more than most people ever really need in real life).

Or to turn the question round, a child is not so numerate. Should they choose Maths A-Level and almost certainly fail? Hell no. Better to pass in something else a bit softer.

Friday, 8 November 2019

Car hits house

From, accompanied by the picture of the wreckage:

Words fail.

Thursday, 7 November 2019

Ex-HMRC head goes through revolving door; forgets everything he ever knew (or should know)

From The Guardian:

The former head of HM Revenue and Customs has called on the government to scrap a controversial tax break designed to help entrepreneurs, which he said was costing the country £2bn a year in lost tax yet provided “no incentive for real entrepreneurship”.

Sir Edward Troup, who was executive chair of HMRC from 2016 until January 2018, said whichever party won the general election on 12 December should abolish the “entrepreneurs’ relief” applied to capital gains tax (CGT).

Troup’s intervention on Wednesday came in response to a Guardian report on Tuesday showing thousands of the country’s richest people were exploiting the policy to pay as little as 10% tax on billions of pounds’ worth of capital gains...

Troup, who is now a consultant at McKinsey, said there was a “very strong case for [whichever party won the election] to ramp down entrepreneurs’ relief immediately”.

Whatever your view, gut instinct tells me that if people build up a business from scratch and sell it, such gains ought to be taxed at a lower rate (aka Entrepreneur's Relief) than straight investment gains, which of necessity mainly accrue to the already wealthy. We can argue about the finer details later on (the £10 million limit for Entrepreneur's Relief seems excessively high to me, why not go back to retirement relief and just exempt the first £1 million or so and tax the rest at full rates?).

For some reason, this ex-HMRC head is homing in on Entrepreneur's Relief while missing the obvious targets.

1. Investor's Relief, which is a 10% CGT rate for people who in subscribe for new shares in the right kind of company, and

2. SEIS, EIS and VCT reliefs, which include a 0% CGT rate on shares (among many other goodies).

It's those two items which are designed to - and do - benefit the already wealthy, not Entrepreneur's Relief.

How the heck he ended up running HMRC is a mystery to me, he'd have failed the most basic tax exam. And presumably McKinsey took him on for his other marketable skills. Maybe he knows how to unblock paper jams in printers or something?

Tuesday, 5 November 2019

Pumpkins at Hallowe'en - Instant tradition

I had a tub of Haribo packets ready last Thursday, The Lass was home first and made the effort of lighting candles in two lanterns to put on the front windowsill.

As I popped out on a shopping jaunt, a group of children (accompanied by responsible adults, it's that sort of suburb) were hovering about in front of our house in a rather indecisive fashion, so I went back inside to get the tub for them. I saw plenty more such groups on the way there and the way back, and had to repeat the exercise of bringing out the tub when I saw another such hovering group on my return.

The Lass told me that only one further group had plucked up the courage to knock on the door while I was out. At the post mortem, Her Indoors and The Lass confirmed solemnly that there is a rule that if you have sweets ready for trick-or-treaters, you have a lit up pumpkin visible from the street; and if not, children assume you are some sort of Hallowe'en Grinch and won't bother knocking.

I told them that this was new to me, we've didn't display a pumpkin in previous years, but kids still knocked. I went trick-or-treating with my own kids when they were younger (and I was the responsible adult waiting on the pavement), they just knocked at every door and hoped for the best, there was no concept of just knocking where a pumpkin was on display, some dished out sweets and some didn't.

They both remained adamant that this is - and by inference, somehow always has been - an unwritten rule. I did a quick and unrepresentative survey at work, nobody had ever heard of it.

So that's my question - is there such a rule? Or were Her Indoors and The Lass imagining it into existence? Did I miss something?

Monday, 4 November 2019

Killer Arguments Against LVT, Not (473)

Physiocrat reminded me to dismantle the Scottish Land Commission - Investigation of Potential Land Value Tax Policy - Options for Scotland - Final Repor.

A lot of it is fairly positive, but they are in a muddle on valuations, making it seem far more difficult than it really is, probably deliberately or perhaps out of intellectual laziness.

From page 30:

Land needs to be valued. This should ideally be undertaken using the comparison approach i.e. by analysing market evidence of comparable land sales. However, evidence of undeveloped land may be scarce.

The alternative is to use an approach whereby evidence of the value of land and buildings sold or rented as an ‘entity’ is analysed to extract the value of the land.

This is not 'an alternative', this is how it's done. The site premium of the few plots of bare land in urban areas is inferred from this (assuming in same area with same planning).

Undertaking this can be problematic as the ‘residual’ method, whereby build costs and other adjustments are subtracted from the total value of the development to arrive at a ‘residual’ land value, can produce confounding results...

We should be using rental values, not selling prices, but for the initial valuations, it's good enough.

... For example, take two dwellings side-by-side. One is three-storey and developed to highest and best use (market value = £1m, build and other costs = £0.5m, so land value = £0.5m), the other is two-storey (market value = £0.7m, build and other costs = £0.3m, so land value = £0.4m).

The land value (and therefore the LVT) of the first property is higher. The relationship between property value and build cost is penalising the development of land to highest and best use, which is counterintuitive as far as a land value tax is concerned.

Initial valuations can be based on actual use, as this is a good proxy for 'optimum permitted use'. At the time any building was built, it probably was the optimum permitted use.

That might change over time, but only gradually; if nobody's applied for change of use on his own plot, we can reasonably assume that the current owner considers this still to be the optimum. If somebody build a larger home ab initio; or bought a smaller home, knocked it down and built something bigger; or bought a smaller home and built an extra storey, that is clearly his opinion of optimum use.

Whose opinion is a better indicator? Nobody knows. Does it matter? No. Valuations are always going to be a bit arbitrary, what matter is consistency of approach.

1. We shouldn't ignore the past and what's already there, so we could just assess the smaller house plot at £400,000 and the larger house plot at £500,000 and have done with it.

Similarly, we shouldn't ignore demolition costs and hassle (as the report does) and practicalities. What is the optimum permitted use of the smaller home? It's probably "leave it as it is".

If you want a larger home on that street but none are for sale, you could buy a smaller one for £700,000, knock it down at a cost of £50,000; build a larger home for £500,000, you've ended up spending £1.25 million for a home worth £1 million, which ain't going to happen. So £400,000 is still a fair assessment.

2. Or maybe you can just buy a smaller home and spend £150,000 on an extra storey; half of the value uplift from £700,000 to £1 million. In which case, if it's a mixed street with equal numbers of easily extendable smaller and larger/already extended homes, it makes sense to assess them all at £450,000. If there are ninety smaller homes and only ten larger ones, assess them at the weighted average of £410,000.
Whichever method is chosen, it will be good enough for initial assessments (I am heartily indifferent), and the % rate would simply be based on the total revenue required to replace existing taxes are replaced, so not huge £££ amounts. Over time, we can be a it more sophisticated; use rental values not selling prices, and so on.

Sunday, 3 November 2019

Vote Lib Dem for a steel-free future

From BBC:

The [new] Woodhouse Colliery would extract coking coal from the seabed off St Bees, with a processing plant on the former Marchon site at Kells...

Tim Farron, the Liberal Democrat MP for Westmorland and Lonsdale, who asked for the "call-in" described the news as "a kick in the teeth in the fight to tackle climate change".

He said: "Cumbria has so many renewable resources to provide energy - water, wind and solar - and we should most definitely not be taking the backwards step of opening a new coal mine."

Which raises the obvious question, can the world produce steel without using coking coal?

To which the answer appears to be "No".

UPDATE: Or possibly "Yes", if you believe the clever scientists.