... in Scotland:
Councils will be given new powers to increase council tax on Scotland's 25,000 long term empty homes raising up to £130 million over four years to build low cost homes, it was announced today.
The changes are expected to deliver around 800 homes annually and support 1,500 jobs in the construction sector and wider economy. The measures are contained in a new policy paper, Homes Fit for The 21st Century, which sets out the Scottish Government's vision for housing to 2020...
'Up to' £130 million divided by 25,000 homes divided by four years = £1,600, so what they are going to do is to allow councils to double the Council Tax on 'long term empty homes' (footnote 19 here).
What they overlook is the following:
i) If the Council Tax surcharge is set high enough, those LTE homes will be brought back into use within the four years anyway, so maybe all 25,000 homes would be brought back into use, so the expected extra income of £32.5 million a year would dwindle to nothing.
ii) If homes are being brought back into use, then a lot of them will need work doing to them, probably in the region of £10,000 each, but this will be private owners spending about £250 million of their own money.
iii) So there's little need for the Scottish government to try and spend all that £130 million (a lot of which won't materialise, see i) trying to 'deliver around 800 homes annually' because the tax system will be delivering 6,250 homes annually.
iv) Neither is there any need for the Scottish government to try and 'support 1,500 jobs in the construction sector' because the private sector would be employing an additional 1,500 people anyway - see ii).
v) Deciding what it long term empty is a very tricky business. Is a holiday home that is used for a few weekends a year 'long term empty'? By their standards, probably not, so all the owner of a vacant home would have to do is camp out there a couple of weekends a year and register it as a holiday home. So it would be administratively simpler to just double Council Tax on every home and then give every Scottish resident a 'Council Tax cash rebate voucher' worth £500 (or whatever the figure is).
vi) The Scottish government does have restricted powers to vary local tax rates, not just Council Tax but also income tax (increase or reduce by three per cent) or apparently reduce SDLT a bit. So if there's money to spare, then why not use it to cut bad taxes like SDLT or income tax rather than building housing? Going by their ridiculous over spend on their own Assembly building, that looks like a recipe for disaster.
Not an individual of mental adventure
59 minutes ago
10 comments:
So what happens to someone who is single and who takes a contract abroad or joins the navy but wants to keep his home to return to?
Every idea of this sort creates losers.
W42, he can sell it or sub-let it, or get some lodgers in or something. And if he is prepared to pay an extra £1,600 a year to save himself the hassle, then that is fine as well.
Yes, you have identified a narrow group of losers, maybe 0.1% of the population - but what about people who come to Scotland for a one year contract? Wouldn't they be quite pleased that there are an extra 25,000 homes up for sale or rent? The point is that the gains to the winners would vastly outweigh the losses to the losers, that's how free market capitalism and democracy are supposed to work.
The only thing that worries me about this proposal is whether the tax can be avoided by taking the roof off the empty house. If so it could end up being pretty destructive.
I first discovered LVT when the Rates were still the preferred method of local taxation. However the big problem with the Rates were that they could be avoided by destroying the building. Obviously this isn't a big problem where owner-occupiers are the taxpayers but it is a big problem when property speculators are involved. I was initially attracted to LVT because it solved this problem with the rates. As I became aware of its other advantages, it just became more and more astonishing to me that taxpayers would consider any other form of taxation. Still does.
So I hope that this latest proposal doesn't lead to unintended consequences.
Give me a voucher for £500 and double my counciltax?!!!!
2 grand a year more for the fukwits at our council to waste , you must be joking.
D, sure, there is nothing a government can't mess up, but hopefully they will ignore dilapidations, i.e. any site on which a building is (or was) standing continues to be taxed as if the building were still standing and in usable condition.
Or indeed sites on which planning has been granted, tax them from date of grant of planning (which massively reduces the size of the loan that the builder needs to take out to buy the land).
Anon, you aren't very good at maths are you?
If the average increase is £1,500 and there are three people per average household, then an average household gets £1,500 in cash vouchers and is not better or worse off.
Derek
One of the few positive things the Brown government did was to change the rules relating to Business Rates such that, if somebody took the roof of a building in an attempt to reduce their bill, the rates would continue to be charged as if the building was in a good state of repair. Not as good as just going for LVT instead, but a step in the right direction.
As MW said, I would hope anybody introducing higher rates for unoccupied properties would also have the sense to introduce rules to make sure that deliberate dilapidation doesn't pay.
Glad to hear that, PL. As you say, not quite as good as LVT but definitely better than what is in place right now. You'll forgive me for being a little paranoid about a definite "outbreak of commonsense". It's just that I've read about too many historical cases where Vested Interests have managed to convince gullible politicians to make small changes to otherwise sensible legislation which has neutered it outright. Here's hoping they don't manage to sabotage this one.
PL, I work in tax, and there are about four good things which stand out among the millions of bad things which Blair/Brown did:
1. Scrapping empty building discounts for Business Rates.
2. Exempting overseas dividends from corporation tax.
3. Reducing VAT from 17.5% to 15% to soften the recession.
4. Cutting corporation tax and scrapping ACT refunds for pension funds.
That's about it, really.
D, let's not get our hopes up too soon. I have it on good authority that the SNP are the most blatantly Home-Owner-Ist party in the UK, i.e. they are still seriously considering scrapping Council Tax entirely and hiking income tax by 3% instead.
they are still seriously considering scrapping Council Tax entirely and hiking income tax by 3% instead
Yup. One of life's great mysteries is how Alex "Slippery" Salmond can be clever enough to run rings round every other MSP in the Chamber (either all at once or individually, it matters not), and dumb enough to want to increase income taxes (and watch the wealthy skedaddle across the border to live in Northumberland instead) at the expense of Council Tax.
And he was reportedly a "senior economist" with the Royal Bank of Scotland!
Oh............ wait one......
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