From FT Adviser:
OECD economists speaking at the launch of the OECD's report, Housing and the Economy: Policies for the Renovation, said the abolition of stamp duty would reduce barriers to entry in the housing market. Asa Johansson, OECD economist, said stamp duty should be replaced with an increased council tax where part of the funds went to local councils and part to the Treasury.
She said: "I think stamp duty should be removed and replaced with a property tax based on the value on the house. It adds on costs for people entering the market."
Ms Johansson proposed replacing stamp duty with a yearly tax, similar to council tax but with part of the funds going to the council and part to the Treasury. She acknowledged such a tax would have the most impact on those home owners who are asset rich and cash poor but said a revised taxation system would be fairer as it would not penalise those who engaged in property transactions.
The OECD also urged the government to tax vacant land to incentivise owners to develop the land and build property on it.
Dan Andrews, OECD economist said: "The current property tax base should be updated to better reflect market values. This would provide more incentives to use vacant land which could help alleviate some of the supply side problems in the UK housing market."
Spotted by Jack C at HPC.
Thursday, 20 January 2011
OECD talkin' sense
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19 comments:
Wouldn't trust the OECD as far as I could kick them.
JH, why not?
"The current property tax base should be updated to better reflect market values." It was because the old Scottish rating system was so superior to the English one in this respect that we ended up with the Poll Tax. And therefore the Poll Tax riots, and therefore the end of Thatcher and then eventually the Blair/Brown government that will be seen, in hindsight, to have abolished Britain.
Be careful what you wish for.
D, that is a non-argument which I covered earlier this week.
If you take Council Tax as your starting point, the Poll tax is completely in the opposite direction to LVT/PPT/Domestic Rates etc.
No, it's a very telling argument, but it does require you to understand the argument rather than to knee-jerk at the words "Poll Tax".
> "I think stamp duty should be removed and replaced with a property tax based on the value on the house
NO! The value of the house (the cost of rebuilding) should be discounted from the cost of the property.
D, I understand your argument perfectly well.
Old Domestic Rates in Scotland = very unpopular with Home-Owner-Ists, so Thatcher caved in and replaced it with the stupidest tax possible = Poll Tax.
And then they replaced that with Council Tax and hiked VAT to boot (also two very bad taxes). What Thatch ought to have done is to increase English Domestic Rates to the same level as in Scotland and told them to stop whining.
Hey presto, house price bubble choked off a year or two earlier; hence subequent crash not as severe as it was; and hence John Major would not have been as unpopular as he was etc.
AC1, details, details. Even if the tax were proportional to total building/land values and not just land values, the existence of a Citizen's Income system more than compensates for the tax on the bricks and mortar element, that's basic maths.
Mark, Thatcher liked HOists. After all, she practically invented them. ("Home-owning democracy" or some such crap.)
B, yes MT was the Patron Saint of HOism, but in relative terms, it was Blair/Brown who took it to extremes - the 1997 to 2007 bubble lasted three times longer and drove prices three times higher than the late 1980s one.
That was why she once said that her proudest creation was NuLabour (or words to that effect).
B, and AFAIAA, NuLab sold off as many units of social housing as did the Tories (if not more).
Yep, you've got to be pragmatic here. It's all a case of supporting any tax shift from a bad tax to a not-quite-so-bad one. So anyone suggesting a shift from sales tax to income tax or from income tax to property tax or from property tax to land value tax is going to get a cheer from me. Even if it is only a half-hearted one for the non-LVT shifts.
In the best-of-all-possible worlds we'd support LVT or nothing. But in the real world we need to support any improvements on offer while we campaign for perfection.
D, agreed. At the margin, I'd be happy if they added a few new Council Tax bands at the top, and if they reduce the savage 4% and 5% SDLT rates, so much the better.
"What Thatch ought to have done is to increase English Domestic Rates to the same level as in Scotland": no, Mark, you've got it wrong. It wasn't the level of rates that differed between Scotland and England. It was that in Scotland the rateable value was updated regularly whereas the English law on the matter allowed the government to delay revaluations indefinitely.
Instead of castigating HOerists , would you not be better directing your fire at LANDOnerists?
Viva Marko!
h/t in our time R4
The revaluation debacle seems to be building again with the Council Tax. And I don't see why. Accurate current valuation is essential for any property tax. And it's not difficult.
Here in Calgary, I get an assessment of the market value of my house every year in January with a month to appeal if I think it's too much. When I lived in Arbroath it was the same. If it can be done in Canada and in Scotland, why on earth can't it be done in England?
As Mark says even a small change in Council tax bands and SDLT rates could have a positive effect.
D. It can. My late father in law was the Inland Revenue DV was for the North East. he reckoned he could revalue annually very easily, and with about the same number of clerks as he already had. Mind you he was always telling IR HQ that he didn't need any more clearks, thank you. Probably why he never got any further up the ladder.
Dearieme, I refer to you to Derk & Lola's answers.
Anon, Home-Owner-Ism is partly driven by the interests of large (rural) landowners, but similarly, NIMBYism runs completely counter to the interests of large (rural) landowners. Re R4, Mark Thomas is top man.
"Dearieme, I refer to you to Derk & Lola's answers": that's rather a graceless way to capitulate.
D, hang about here, with taxes on land or buildings, there are two variables:
1. How much the tax raises relative to other taxes. (and if the answer is 'too much' then which taxes would you have increased?)
2. Whether the tax is paid on up-to-date or accurate (relative) valuations. It is of course only relative values that matter, not absolute ones.
So are you complaining that either in E or S:
1. The tax was too high in S or too low in E?
2. Valuations were too up-to-date in S but too out of date in E? Would it have been better to update more often in E or less often in S?
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