Andrew Ellson (nearly) sees the light...

From today's Times:

For a start, taxing the property ... of the rich is a better way to raise revenue than taxing their income. Property is an unproductive asset that benefits few, whereas work creates wealth, ideas and businesses that benefit everyone — the taxman included. Taxes on properties are also hard to avoid — you cannot take a ten-bedroom mansion to Monaco, but you can take your business and ideas.

Furthermore, property taxes in the UK are actually low by international standards. According to research by Taxand, a global network of tax advisers, the tax liability for selling a £700,000 property in the UK is substantially less than in Spain, Italy, France, the Netherlands, Portugal, Australia and India. The UK is also alone in Europe in not levying VAT on the sale of new-build properties — saving buyers tens of thousands of pounds.

That first paragraph is a corker, but for two things:

a) He is not actually talking about "taxing the property of the rich", i.e. Land Value Tax, he is talking about "taxing the property purchases of the rich", i.e. Stamp Duty Land Tax, which is only levied when land and buildings are bought and sold, i.e. the tax (taken in isolation) is a Bad Tax because it discourages efficient allocation of assets, and

b) Why single out "the rich"? The same logic - that it is better to tax property or land values than income - applies all the way down the spectrum, from Sir Philip Green all the way down to a humble shop assistant; from Premiership soccer players down to the groundsmen; or from a bank's board of overpaid directors all the way down to the bank clerk, security guard or cleaning lady.

The bitter irony here is that Council Tax/VAT on domestic fuel/TV licence fee paid by people in the smallest/cheapest homes is considerably more than Vince Cable's proposed Mansion Tax rate of one per cent (when compared to the value of their home); and while people in more expensive homes can pay their Council Tax out of petty cash, if you add together Stamp Duty Land Tax and Inheritance tax, the average rate is probably pretty close to one per cent as well (maybe a bit more, maybe a bit less), which is why I have always argued we should replace all these taxes with a flat-rate property tax.

He's off piste with the last sentence as well of course; VAT on new construction is not borne by the purchaser, unless he is prepared to pay 17.5% more for a new house than a 'second hand' one; all that happens is the value of the land/planning permission is depressed by the amount of the tax, but as Andrew Ellson has hitherto been one of The Times' prime proponents of Home-Owner-Ism, this is nonetheless a promising start.