Hopes raised, hopes dashed

George Obsorne, after showing a glimmer of intelligence over the whole B&B debacle, has now  reverted to type. This bit of his conference speech sounds all well and good:

"We built an economy on the engines of finance and housing and government spending, and the government never stopped to think what would happen if the engines stalled. Now the credit has dried up, the engines of the economy have stalled, the party is over."

As does this ...

The [tax] freeze would be paid for by cutting consultancy budgets by £270m in the first year and £770m in the second. Budgets for frontline services such as NHS, schools and police - and the Department for International Development - would not be cut.The Central Office of Information budget would be cut by £230m in each of the two years.

Great. £1 billion of waste down, £99 billion to go ...

But which tax do they want to freeze first?

Council Tax, of course! According to this Tory opportunist "Council tax bills are the third highest monthly bill after housing and fuel bills - local councils must deliver high-quality services at the lowest cost to the taxpayer."

Does this joker not realise that all taxes are ultimately borne by individuals/households? So applying his 'logic', Council Tax (£20 bn) is only the seventh-biggest monthly bill after income tax (£130 bn), National Insurance (£85 bn), VAT (£80 bn), corporation tax (£40 bn), housing costs and fuel bills.

Agreed, The State should be delivering high-quality services at the lowest cost (or not at all), but why restrict this to a narrowly defined range of expenditure that happens to be covered by Council Tax, which raises barely 4% of total government revenues? AFAICS, nearly all services are local services. So if councils can run things more efficiently than central government (and they probably can - less layers of bureaucracy and corruption), why not devolve more stuff down to them, even if that means that local taxes (primarily Council Tax and Business Rates) go up a bit? 

It's all well and good George Osborne railing against an economy based on credit, but the flipside of the credit bubble is the house price bubble, which are now both bursting in tandem. So if you freeze Council Tax (which is more akin to a user charge than a tax) rather than cutting economically damaging national taxes (which are purely confiscatory; primarily VAT and Employer's National Insurance), all this will do is to kick-start the next house price bubble. Which is exactly what happened after they got rid of Schedule A taxation in 1964 and after it became clear that they were going to get rid of Domestic Rates in the 1980s.

Ah well. It's a good job I sold to rent last year, so I can make another small fortune during the next bubble. I'm going to keep doing this until they learn their lesson and replace all existing property and wealth related taxes with Land Value Tax. Twats.