The Lib-Cons have been fairly slow out of the starting blocks, but they are continuing with Labour's fine work, such as encouraging a state-owned mortgage lender to grant 90% mortgages, even though this pushes it into a loss-making position.
But they have now (finally!) realised that if they use up about 3% of the extra £20 billion a year they are taking out of the economy in additional VAT and National Insurance, they can reduce people's Council Tax bills ever so slightly:
[The Morbidly Obese One] said "real help now to assist with the cost of living" was being provided.
I'm never quite sure how stupid people are, or is it genuinely the case that they don't care if the average marginal tax rate on income creeps over 50%, as long as the modest Poll Tax on houses is reduced a bit? They don't care about paying hundreds of pounds extra in taxes on economic activity as long as Council Tax is reduced by 35 pence a year?
The whole things puts me in mind of the old song by Carl Perkins:
Knock me down, step on my face,
Slander my name all over the place,
Do anything that you wanna do,
But oh, oh, honey stay off of them shoes
Yeah burn my house, steal my car
Drink my liquor from an old fruit jar
Do anything that you wanna do,
But oh, oh, honey stay off of them shoes...
Grand theft Labour
3 hours ago
3 comments:
People aren't so much idiots as mathematically illiterate.
I remember when Hague had his brief lead in the polls during the petrol dispute when he promised to cut the fuel tax by 6p/litre. I worked out the saving to the average motorist as something like £75/year, far less than the effect on their pensions by the stealth tax or that tax thresholds weren't being increased.
It's about what's visible to people. People can see their council tax on their bank statement every month, where they don't see the VAT or the employer's NI.
Surely the losses at Northern Rock aren't to do with being "forced" into lending 90% mortgages? They're highly profitable if you get your credit-scoring right, as you've pointed out before.
The problem with Rock is that they aren't lending enough. The tap's half closed.
Note I'm not concluding that more lending on houses would be better. Just that it's a lack of lending at NR, not high LTV, causing losses.
JT, yes, people moan about 'stealth taxes' but the pol's know that they can do as much stealth taxing as they like, it's the 'in your face' taxes that people moan about.
Which is why my cunning plan is to collect Council Tax (or Domestic Rates or LVT or whatever) via people's PAYE codes; they'll pay less and less income tax/NIC and more and more LVT and most won't notice the difference.
FT, sure it's two issues:
a) The losses that NR are now 'fessing up to may relate to older 100% or 125% mortgages, but
b) As it was high LTV mortgages that got them into this mess, I fail to see how 'more of the same' will get them out of it.
And as you say, it's the credit scoring that matters - a two-earner couple no kids wanting to borrow twice their annual income to buy a small home can easily afford 150% LTV.
But ultimately, loans are NOT secured on the land and buildings, they are secured on the earning capacity of borrowers generally - if your current borrower at high LTV defaults, then you can only repo' and sell the house without making a loss if there's somebody else in the queue with sufficient earnings etc.
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