From today's FT:
... Any property owner considering improving or extending or in some way enhancing their property will surely think twice if the value added above the suggested £2m threshold is then effectively taxed annually at 1 per cent or more. Every £1 of potential tax could immediately defer £100 of contribution to the economy.
Robin Creswell, Downton, Wilts, UK
That is of course an argument for taxing the rental value of each site, over which no individual owner has the slightest influence*, but even so, it is a complete and outrageous lie.
Under current rules, if you buy £10,000's worth of kitchen, that triggers an immediate tax liability of about £4,000 (VAT and the retailer's and installer's tax bills), but people still have new kitchens fitted. And extending your house can bump it up a Council Tax band (which bizarrely only kicks in after the next change of ownership), but £300 a year extra Council Tax pales into insignificance compared to the cost and hassle of having the work done or moving home etc.
I myself had a loft conversion done, which must have triggered about £15,000 in VAT and income tax liabilities and bumped up the Council Tax by £300 a year, but as the total cost of £35,000 added £5,000 to the enjoyment or rental value of the house; and about £50,000 to the selling price, it was still money well spent (the ideal thing to tax would have been the £15,000 windfall gain; not the £35,000 real economic activity). And to earn that £35,000 net I had to earn £60,000 gross, etc etc. The loft conversion still happened (and a very nice one it was too).
And if his logic were correct (rather than being an outright lie) then there would not be a single commercial building in the UK, as all improvements are liable to Business Rates (effective rate about 2% of the cost/value of improvements).
* So as per usual, the Homeys have two arguments which are not only wrong in themselves but which contradict each other: we can't tax improvements because they are under the control of the owner and we can't tax the site rental value because it is not under the control of the owner. But of course we can tax incomes because they are... under the control of the worker? Not under his control? Which is it to be?
Sounds as if he's been reassured
2 hours ago
8 comments:
The other question is how many homes worth £2m are actually extendable. I've looked at Maidenhead, which is seriously posh and there's 6 homes for sale over £1.7m and under £2m. The majority of £2m+ homes are in London, which means they're in a terrace.
Bigger point... why is this not a "slam-dunk" tax? I can't believe people are defending home owners in this way, especially people who own homes that are way outside their league, many of whom have made their money because the state over the past few decades has centralised power in London (which then ripples out in the South East).
My advice is to convert the West Wing into stables and acqure a few good horses.
TS, there was a survey recently and a large majority support a Mansion Tax starting at £2 million and a small majority support a Mansion Tax starting at £1 million, so I think the media like to ignore the majority on this one.
(The maths of it is, land ownership is so skewed that 80% - 90% of people would be better off under an LVT-only system, but again, the pol's and press appear to have persuaded people otherwise).
Phys, but then evil Commies like you would put a tax on horses because you hate wealth.
"And if his logic were correct ...then there would not be a single commercial building in the UK, as all improvements are liable to Business Rates"
I used this logic to argue with people over at C@W. It didn't go down well!
Do you think "the media" might be against a Mansion Tax because the people who own and edit newspapers might be disproportionately affected?
BE: "I used this logic to argue with people over at C@W. It didn't go down well!" Welcome to my world.
And yes, it is safe to assume that people who own newspapers also own lots of land and buildings (and nice homes), these things seem to go hand in hand, you don't hear about newspaper proprietors who also own a car factory or a chain of launderettes.
Look, suppose we say - "you have a choice. Either pay LVT at 8% (or whatever) or pay all your existing taxes. Just tick this box. You then get a little card that exempts you from all other taxes / gives you a rebate where they are in the price."
So I'll choose to not pay all other taxes. You can chose to pay IT.NIC etc etc if you think it's better.
You could start off with trading income tax and NIC for LVT. Then move to VAT and so on.
L, that is a great idea (the admin would be a bit of a faff, but hey).
The next question is: what about tenants who don't own any land at all? Presumably they'd get the exemption card and pay no tax (to the government) at all?
So to prevent mass evasion/huge shortfall, LVT would have to be imposed on rented homes (i.e. a tenant rocks up with his tenancy agreement at the town hall or wherever and applies for his exemption card, the people at the town hall then note the address and send the LVT bill to the registered owner).
But at least two-thirds of people would be paying less tax from Day One.
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