Amazing.
I caught a repeat of the BBC's HardTalk interview with Ireland's former Prime Minister Bertie Ahern yesterday evening. At about one minute in, he is asked whether he allowed the Irish economy to 'overheat' and whether he should have 'put the brakes on'. He admits that maybe they did, but they couldn't put up interest rates as they had already joined the Eurozone.
And then at 1 minute 37 seconds in, he mutters as an aside, "The second thing we could have done is to have a property tax, which there was no stomach for in Ireland", and that's it. It's like the briefest glimmer of hope that there are others who understand all this, so fair play him for even having considered it, given that e.g. in the United Kingdom, any politician who suggests such a tax is immediately decried as a communist or worse.
Saturday, 24 October 2009
"The second thing was to have a property tax..."
Subscribe to:
Post Comments (Atom)
13 comments:
"immediately decried as a communist or worse."
You mean there is something worse than a communist?
Drat, my apologies. Just remembered there is that LibLabCon crowd!
Easy to consider something, knowing it will never come to pass.
But WE don't want a PROPERTY tax, we want to tax the land value.
We actually want to exclude the building from the tax.
That's why an LVT is in reality a Rebuild Discounted Land Value Tax.
WFW, you said it.
JH, but at least he mentioned it, like Uncle Vince with his "Mansion Tax".
AC1, there's a big grey area between pure LVT and PPT, the impact of such a tax affects the least elastic variable, i.e. the land, most. I'm not too bothered either way.
There's a big difference between a pure LVT and a PPT.
The PPT discourages investment in what is on the land. That's a disaster.
AC1, the difference is that LVT is PPT (like Business Rates) minus the buildings element, a bit like having a personal allowance for income tax.
Given the total and utter resistance of people to either form of tax, I'd rather argue for something they can understand. PPT can be tweaked to be a fixed charge per square yard for land in any particular area, so that it comes to the same thing.
they couldn't put up interest rates as they had already joined the Eurozone.
Rubbish. They can't put up interest rates per se but a government could have the same effect by introducing a debt tax. Normally interest paid on a debt is tax free, while interest earned on savings is taxed. Why not reverse this?
The government could add e.g. a 1% tax on the capital value of debts, to be administered and collected by the banks on the government's behalf. If desired, one could focus the tax on specific types of debt, e.g. mortgages with over 80% LTV rather than business loans.
Ed, the popular (and probably correct) view is that the govt can dampen property price bubbles by hiking interest rates, which would have the same effect as what you propose, although LVT would be far better as it is a far less blunt instrument.
An interest rate hike only affects recent purchasers (or recent remortgagors) whereas an LVT hike affects all property owners alike, ergo, an 0.25% LVT hike would probably have the same impact on land values as a 1% interest rate hike, but without the collateral damage.
As an aside, banks don't have to charge VAT, unlike productive businesses, so a 1% "debt tax" would at least level up the playing field a bit, i.e. it isn't the worst idea in the world.
As I see it, poll tax and council tax may well have been retrograde steps from the old 'rates' system. Not that I'm old enough to remember the details.
If those levels of local taxes had been maintained then maybe we would never have had the housing bubble in the first place. But we would also have had far fewer owner/occupiers, something I think we will experience in the future.
JT:"If those levels of local taxes had been maintained then ... we would also have had far fewer owner/occupiers, something I think we will experience in the future."
Why? Property taxes act like a higher interest rate, which don't affect potential buyers as the selling price falls to compensate, i.e. it's cheaper to buy in a high-Council Tax-borough than in a low-Council Tax-borough so that your total bill (mortgage plus Council Tax) is much the same either way.
And if a potential buyer can afford it (who of necessity has a lower income and a larger mortgage than people who've been there a while) then surely the people who've been there a while can afford it too.
NB, the first big price boom wasn't until after they scrapped Schedule A tax and the second one was around the time they scrapped Domestic Rates. A lot of people 'jump on the ladder' solely to try and make windfall capital gains. If prices were low and stable then many more people would be happy to rent.
I think I'm getting sold on this land value tax thing.
Steven_L
It has a long and distinguished history
http://lowertaxestotheground.com/history.aspx
FAO DomFisher.
From the comments on PragueTory's 'blog "The idea of a land value tax is morally repugnant. I we do not have enough houses the solution lies in the market being freed up and not in further penalising people who have managed to retain assets despite the predations of socialist and successive wet so called conservative governments."
Post a Comment