Henry Law has done an excellent summary, read up at the LVTC website (they could do with the hits).
Friday, 27 May 2016
Emailed in by MBK, from The Telegraph, Peter Lilley on top form as usual:
Trade and the Single Market are key referendum issues yet I am the only MP with first-hand experience of either. Sadly, when politicians debate issues of which they have no experience they seize on any plausible argument which supports their case, even arguments that are the reverse of the truth.
Let me bring some facts to bear on claims made by those who want us to remain in the EU.
How important are trade deals? It pains me to admit – their importance is grossly exaggerated. Countries succeed, with or without trade deals, if they produce goods and services other countries want.
Tariffs between developed countries now average low single figures – small beer compared with recent movements in exchange rates. The most worthwhile trade agreements are with fast-growing developing countries which still have high tariffs.
Is our net £10 billion contribution to the EU a price worth paying for tariff-free access to the EU market? If we left the EU with no trade deal – inconceivable given the tariff-free zone from Iceland to Turkey – our exports would face EU tariffs averaging just 2.4 per cent. But our net contribution to the EU budget is equivalent to a 7 per cent tariff. Paying 7 cent to avoid 2.4 per cent costs is miss-selling that dwarfs the PPI scandal!
Does EU membership help us negotiate free trade deals with the rest of the world? Tariff-free access to the fast growing, protected markets of Asia, Africa and Latin America would be worthwhile. Unfortunately, EU membership prevents us negotiating free trade deals – and the EU has negotiated few deals for us: none with China, India, Australia, Brazil.
Does the EU’s size mean it gets better deals than we could alone? This is the reverse of the truth. The more countries involved in a trade deal the harder, slower and worse the result.
All 28 EU members have a veto on their negotiations which is why EU deals take so long and exclude so much. Bilateral deals are simpler, quicker and more comprehensive. Hence Chile has deals covering countries with collective GDP five times the EU’s deals. Even Iceland – population less than Croydon – has a trade agreement with China – as does Switzerland.
Would Britain have to renegotiate from scratch the EU’s existing trade deals? Under the “principle of continuity” in international law we can adapt existing EU treaties to the UK. We should start that process before leaving the EU.
Would negotiating continued free trade with the EU take many years? Trade deals to remove tariffs involve complex trade-offs between differing tariffs on thousands of products and facing up to the vested interests they protect. Negotiating continuing tariff-free trade between the UK and EU simply means keeping zero tariffs.
Do only European Economic Area members have access to the Single Market? The Single Market is talked about as if it were some inner sanctum accessible to a privileged few. In fact, every country has access to the Single Market – with or without tariffs. The Single Market, involved harmonising product rules – sensible, since businesses can now make one product range for the European market, not 28. But that benefits American and Japanese exporters as much as German or British firms.
People assume Britain benefits from participating in setting these rules. But rules provide a framework within which all companies operate – not an advantage to any individual country.
Britain set the rules of tennis but rarely wins Wimbledon. British exports to the EU have grown less rapidly since the Single Market than they did before, less than our partners’ and much less than non-EU countries’ exports! Maybe that is partly because we suffer EU regulations on 100 per cent of our companies whereas non-EU firms need only comply with EU regulations on activities carried out within the EU.
Our shops are full of goods from countries with which we have no trade deal. They are not essential now tariffs between developed countries are so low. But outside the EU we will be able to negotiate speedily the really worthwhile deals to access fast growing protected markets such as China, India and Brazil which the EU has ignored. And we can retain free trade with the EU without paying our current entry fee which costs more than the tariffs we avoid.
Thursday, 26 May 2016
Emailed in by MBK from The Sun, David Cameron plumbs new depths of silliness:
DAVID Cameron tonight warned the elderly a Brexit would wreck their pensions and cost them their carers as No.10’s Project Fear targeted Britain’s OAPs.
In an extraordinary blast the PM used his latest Referendum attack to try and scare the over 65s – the one age group most likely to vote Leave - into changing their mind. He said quitting the EU would shrink Britain’s economy by six per cent- meaning “less money to pay people’s pensions”.
And he added that cutting ties with the EU could cause shortages in the amount of migrant workers in the care sector handing out medicine. He told Saga magazine: “There are 100,000 skilled EU workers in our health and social care system. If we leave there will be uncertainties around visas and residency permits. That could cause some to return home and that would have an unpredictable impact on hard-pressed frontline services.”
You're the Prime Minister, Dave, you get to decide how high pensions are and who can live and work in this country, even after Brexit.
Wednesday, 25 May 2016
From BBC Reality Check:
Claim: Leaving the EU would make an average holiday for four people to the EU £230 more expensive in two years.
Reality Check verdict: It would be reasonable to expect a weaker pound to make foreign holidays more expensive, but it is hard to predict a precise figure.
We do not whether and by how much GBP would fall (or rise) relative to EUR post-Brexit, if it were to fall, then yes, the GBP price of holidays in the Euro-zone would go up slightly. Big deal. The amount you spend on a holiday is a fairly arbitrary figure, you can always go self-catering instead of full board; or camping instead of a hotel; or eat McDonalds not a four-course with wine; go for a walk or to a museum instead of to a theme park etc. Over the years, GBP has been a lot lower relative to EUR than it is now, and people still went.
But exchange rates are just one factor in the price of holidays.
As we well know, resorts set prices according to demand, and it is significantly cheaper during term time than during school holidays, so we could more than alleviate this perceived problem by having more flexible term times, i.e. having school holidays at a time when most other European countries don't.
Which brings us to this article from The Daily Mail:
Tourists are facing a shortage of sunshine holiday spots this year as British families turn their backs on previously popular destinations.
Travel agents say that thousands have switched to ‘safe haven’ resorts such as Spain, Portugal and Italy – apparently in response to terror attacks elsewhere.
However, there are simply too few hotels, apartments and villas to cope with the surge in demand. Even if people can find a holiday in Spain, analysts suggest they are paying a ‘safety premium’ of up to 20 per cent compared to destinations including Tunisia and Turkey.
Surely this will also push up prices and by considerably more than fluctuations in exchange rates?
Tuesday, 24 May 2016
Here's the second half of the drivel I looked at yesterday, from the FT comments:
We did a small study to discover how many owners would have to sell up in a street where prices are at their highest [if LVT were implemented]. We reckoned there were 12. The street was in Cambridge and the owners were the most vocal that exist, professors! One house sale might not affect prices too much but 12 would certainly burst the bubble. Yes it needs bursting but carefully and sympathetically.
Fact free drivel. How many houses are on that street? What level of LVT is he talking about? Very low level like Council Tax; middle of the road LVT to replace existing taxes on land, buildings and capital; or fairly full-on LVT to replace large chunks of VAT, National Insurance, higher rate income tax etc? Has he factored in the corresponding tax savings? Has he fuck.
One house sale might not affect prices too much but 12 would certainly burst the bubble. Yes it needs bursting but carefully and sympathetically. There would be more upward pressure on the price of starter homes as it takes 100 years for the supply housing to adapt to changed demand.
Ah, the old Homey switcheroo -- say something irrelevant or downright incorrect and then contradict yourself with something equally irrelevant or downright incorrect, thus making it impossible to have a sane argument. If the price of some homes goes down, that is A Bad Thing, if the price of other homes goes up, that is also A Bad Thing.
Either way, actual selling prices themselves are irrelevant, what matters is the rental value, which is dictated by much wider forces than a few people, or even a lot of people selling up and trading down (with a corresponding number trading up). The chances are all the movers would remain within the same area doing the same jobs (or not as the case may be) and it is this collective effort which dictates the overall rental values of homes in an area, not exactly who lives where.
[There follows an ad hominem attack on all Georgists, skip that].
By the way there is an interesting question: are non income producing assets really wealth? Houses are a cost while one lives in them. Council tax has to be paid out of income. The question is an old one, asked in the first ever book on economics, the Oikonomos of Xenophon. Don't suppose Henry George thought about it.
FFS. I ask you. Are things like old master paintings, gold coins "wealth"? Of course they are. What about other assets - cars, fridges, computers. Are they wealth? Of course they are. HG devoted a whole chapter to this topic, as it happens.
But that is a sideshow, LVT is not a tax on "wealth", it is a user charge. It is not like rent, it is rent. What you are paying for is the benefit to yourself, like buying food, going on holiday or running a car or whatever. But having decried LVT incorrectly as a tax on "wealth" he then says that Council Tax (and by implication LVT) has to be paid out of income. It's the Homey switcheroo again.
Have you no sympathy at all for those who while earning big money acquired a very nice house and in retirement can afford to stay there provided they are not taxed out of it?
Yes, we do have sympathy for all low income people, hence most of us recommend a roll up and defer option for pensioners. But we do not see why those who hit the housing jackpot deserve more sympathy that those who didn't.
Myself I owned a house in the premier residential location in the North of England and hung on to it for 20 years after retirement. I traded down 11 years ago. The move cost £35,000, most of it tax. Not many retired have a net income of more than £35k.
So what? What is the relevance of any of this?
Emailed in by MBK, from The Sun:
Fuelling the Tory civil war, Mr Osborne also mounted a direct attack on leading Tory Brexiters by claiming they think an economic shock is “a price worth paying”.
The Chancellor told them: “It’s not your wages that will be hit, it’s not your livelihoods that will go, it’s not you who will struggle to pay the bills. It’s the working people of Britain who will pay the price if we leave the EU.”
The World Bank also yesterday warned that Brexit is one of the biggest threats facing the poorer countries in developing world. The British economy’s stability “is really important for the global economy”, its head Dr Jim Yong Kim said.
Monday, 23 May 2016
BenJamin' did a bit of goading at the FT, and earned this hysterical response:
I take it you are happy to ghettoise the income rich from the income poor, to bankrupt every pension and insurance fund, and put millions into negative equity.
We have expensive and cheap areas already, largely populated by wealthy and poor people respectively. LVT merely speeds this up a bit. The part about bankrupting pension and insurance funds is completely baseless. Negative equity is a transitional issue that could be solved by the brute force of mortgage write-downs, in any event, the people with the largest mortgages will save the most tax.
Here's where the real fun starts - he manages to completely contradict himself:
The finest houses will be all owned by the income rich.
True - for high value locations.
Great gardens which are now open to the public like Kifsgate [sic] and Arley will be sealed off by their new kleptocrat owners.
These 'gardens' are not 'open to the public' like parks, they are privately owned and operated and charge admission.
The value of these gardens is not so much about location as the sheer cost of maintaining them. The LVT on remote country houses would be negligible and certainly no more than their current Business Rates bill (or is there an exemption for them?). I don't know what sort of profit or loss the NT makes on their stately homes, but I am quite sure that maintenance swallows most of the ticket price. It's like saying "Some wealthy person will buy up LEGOLAND and hog all the rides for himself".
Clearly, some wealthy people want flash gardens, and if they do, they can start pay for their own teams of gardeners if they wish - but they can do that anyway.
They will love the tax as they would pay less than if a progressive income tax were the primary tax source.
True - high income, internationally mobile people will be attracted to the UK by the low rate of income tax. Easily observable in practice.
As domestic houses have higher site values than commercial buildings the tax burden will be shifted to the domestic owner unless there is a fudge as is typical in the US.
Yes, residential land is under-taxed, but dude WTF? Industrial buildings on the outskirts have negligible location values, suburban housing land is clearly worth much more, but the most expensive locations by a factor of ten are city centres, which is mainly shops and offices etc.
Then when the crooks and corrupt of the world stop investing in Britain the land value will vanish and you have no plan B.
Wahey! So now he says that high income, internationally mobile people will stop coming to the UK! Thus completely contradicting his original line of bullshit.
...they are lying again. Headline and Article.
Heir to Blair indeed.
I do not have time to fisk the whole nonsense, so let's consider what would happen to the GBP if (when?) we exit. We should note that Cameron/Osborne comments are pure speculation. The numbers they cite are just fiction. (In lots of ways this sort of lunatic economic soothsaying is what has got us into this mess in the first place.)
Initially there will be uncertainty in the currency markets. (Personally I think that a lot of that is already in the price.). The markets will then take time to work out what is going on. I don't think that that will take long - financial markets being among the most efficient markets. The markets will quickly realise that we are off the hook for all our contingent liabilities to the EU. These are both massive and we have the true quantum deliberately hidden from us. They will also realise that the government's finances have been materially improved by about £9 Bn per annum. (I concede that there is a lot of uncertainty as to just how much the EU costs us). This will mean that we can repay our international debts quicker. Although it will take longer (the quangoistas will fight like Hell to hang onto their power and fat entitlements - I fully expect them to argue that 'now we have left the EU we need more regulation') the deadweight costs of EU created regulatory burden will be removed from the 55% of our international trade that does not go to the EU and all of it from the 90% of our GDP which is internal. Production costs in the UK will fall. (If the Government had any clue what is was doing it could immediately cut taxes on production and hence create a low tax economy which in turn would immediately cancel out the 4% to 5% external tariff on exports to the EU. Next and crucially we will be able to return to proper supervision of our banks. (As you know I hold that Bank of England is largely incompetent at this and the FCA / PRA totally useless), but we could start to address the structure of bank capital outside the constraints of the EU's agenda that is to keep itself and the Euro in being come what may, mostly by printing money. The City would profit from this. I also fully expect us to quickly become the largest offshore financial centre on the planet. (As part of this I also fully expect London land prices to carry on rising - but 'we' know how to address this, don't 'we')
Overall I expect GBP to rise in relative price.
Which is good because we'll be able to buy Mercedes cheaper. Question, What will Mercedes do with all those lovely GBP's? Where can they spend them?
Cameron / Osborne whole scare mongering meme is based entirely on ill thought out speculation and deceit.
From the BBC
Jude Law, Keira Knightley and Benedict Cumberbatch are among stars who have signed a letter saying Brexit would "damage" the creative industry.
Almost 300 actors, musicians, writers and artists are backing calls for the UK to stay in the EU.
They say "vital EU funding" and work across borders has been key to projects from galleries to blockbusters.
OK, for starters, if there's something here that is funded with "EU money" and we should fund it, then it's very simple. Some passing it to the EU to pass back to us and just fund it ourselves.
As it happens, I don't see why the EU (or us) should fund very much art at all, particularly not blockbusters or galleries. I happen to rather like big superhero movies, but I don't see why anyone but me should pay for them, and I mostly don't care for galleries and don't see why I should pay for them (I really like sculpture, but I can look at a painting on my PC at home).
The letter, organised by the Britain Stronger in Europe campaign, says: "Britain is not just stronger in Europe, it is more imaginative and more creative, and our global creative success would be severely weakened by walking away."
So, like when Shakespeare pinched Macbeth and Romeo and Juliet from Europe 300+ years before the EU was founded? Or how about that Emeric Pressburger came here from Hungary 50 years before the EU. We don't have an "EU" with America, but somehow, Stanley Kubrick came here to work. Alfonso Cuaron has been here for over a decade, despite there being no superstate including Mexico and the United Kingdom.
As for "our global creative success", utter rubbish. That's down to a number of things: being an advanced nation, being fairly liberal. speaking English and in the case of the film industry, making it tax beneficial to make films here (and that we have huge amounts of technical skills in making blockbusters which goes back to at least the 1970s when we were in the EEC and less connected).
Even before the EU you were far more likely to see a British film on American screens or to hear British pop simply because of language.
Sunday, 22 May 2016
From The Daily Express:
AN ESCAPED water buffalo was shot dead yesterday after roaming through a village and seriously injuring a man.
Police called in a licensed slaughterman to kill the animal after it was reported to be "on the loose" near a primary school in Seighford, Staffordshire, having escaped from a farm.
One man suffered a serious leg injury after being knocked over by the animal.