Spotted by Bob E in The Telegraph:
Buyers of gas-guzzling sportscars and other large-engine vehicles would face a new purchase tax (1) of up to £23,000 under plans drawn up by a government adviser and backed by a Cabinet minister.
Even the price of some small cars would rise by more than £1,500 in exchange for the abolition of annual Vehicle Excise Duty payments. However, buyers of new small efficient cars would get a government subsidy of up to £750 (2), under the proposed rules, which are being promoted by the Liberal Democrats. The proposals for vehicle taxation come as the Treasury considers the best way to reform or replace VED to respond to the increasing fuel efficiency of modern cars (3).
The plan is put forward today in a think-tank paper written by Tim Leunig, who has recently been appointed a special adviser to the Government. Mr Leunig’s paper for the Centre Forum think-tank – written before his appointment -- has been backed by Ed Davey, the Energy Secretary...
Mr Leunig said: "More efficient cars save motorists money and reduce global warming. What's not to like?"(4)
1) We already have a "purchase tax" on new cars, it's called "VAT". And a very bad tax it is too.
2) Brilliant. A "purchase tax" and a subsidy, all in one go, maybe we could just net off the two to a smaller tax amount?
3) We already have a splendid tax on the amount of fuel you use/amount of road space you use (two birds, one stone), it's called Fuel Duty.
4) Coming up with shit ideas and then using one of my favourite sign-offs, which I in turn adopted from The Remittance Man.
And Let's All Hope It's Not The Last...
1 hour ago
26 comments:
Hmm, and what sort of cars is the UK currently so successful at making?
PC, AFAIAA, we make (under foreign ownership) as many cars as we did in the 1970s. There's a romantic prejudice that we Brits are particularly good at tip top super cars, but no doubt Italians and Germans would claim that mantle for themselves.
"More efficient cars save motorists money and reduce global warming. What's not to like?"
Bulldozing the Hallowed Greenbelts would also do this.
The petrol bit is an irrelevance today. I worked out that taking a BMW 520d from my house to the west coast of France would cost (return) an extra £20 over a Megane (using official figures). When doing 500+ miles, being able to cruise on the Autoroute and having the extra room in the car is definitely worth it.
TS, when you say "bulldoze the hallowed green belt" so you mean "allow more houses to built closer to where people work" and/or "allow more factories to be built closer to where people already live"?
As to your calculations, agreed. By their own admission, high fuel duties have done their job and cars are much more fuel efficient than they used to be, and hooray for that.
We saw this guy as clueless long ago. He recently formed thelibdem tax working group which sfr semi member Neale Upstone played a sterling part in trying to get sense started.
Leunig left soon after for a much mor lucrative role evidently. Not once defining clearly what a wealth tax is, notwithstanding Mr Upstone asking many times I believe.
This is just another form of mansion tax. Or 'wealth' tax. Wealth being something that has yet to be defined clearly.
A blind man, leading the blind, studying at the school of Cable Economics. We are fucked.
Wonderful. No annual VED.
Except, we'd then be hit with road charging after they've milked the 'we are the motorists friend' for all its worth.
Mark,
TS, when you say "bulldoze the hallowed green belt" so you mean "allow more houses to built closer to where people work" and/or "allow more factories to be built closer to where people already live"?
Actually, it's more the first.
The other answer to high house prices in the South East would be to shrink the size of government. A lot of work in London is part of the supply chain to the state.
RS, yes, he's fundamentally anti-LVT so he is also fundamentally anti-fuel duty.
JP, fuel duty IS road charging, without the hassle.
TS: "A lot of work in London is part of the supply chain to the state"
And if it isn't that, it's other highly profitable state-backed activities like banking and land speculation. London is more of a subsidy junkie than any other region.
@MW and RS
Robin is right: this Tim Leunig has a history (including on land issues).His trademark idea is the Community Land Auction,where the community gets the value of planning permissions up front instead of waiting for the trickle effect of LVT revenue.That he has been appointed as a government adviser is pretty surprising: he comes across as freelance nutter like the rest of us.But without the history of land tax thinking to sort our heads out for us.(According to his own account in the Guardian ,he received death threats for saying trying to regenerate places like Rochdale was a waste of time.)
Corrections needed to RS's earlier posts.
TL is not on the TPWG for the LibDems and did not form it. He was, but is now a civil servant so plays no role. While not a proponent of LVT, he was an asset to the group, and his loss has made it more difficult to get people to focus on sane economics rather than on the politics of populism.
As DBC Reed points out, Tim Leunig has actually made progress on re-capturing land rents, in the form of CLAs.
I'm not familiar with having repeatedly asked him to define a wealth tax.
MW: Where's the stuff about anti fuel-duty?
The proposal seems to be a suggestion replace VED with an up front charge, hence attempting to target the original purchaser with a headline capitalised VED, rather than it being paid each year.
I do think we should periodically adjust VED to provide an incentive for manufacturers to go further. It's now too easy to hit the cheapest bands.
I can see some logic in the proposal. It would make the price of something like a Toyota Prius easier to compare to something cheaper but less efficient.
DBC, there is a fine line between "moderate land value taxers" (like Tim Montgomerie) and "traitors to the cause". The idea of CLA is like "special land value tax collected from newcomers and dished out to existing NIMBYs as a bribe" and is in fact the complete opposite of the ideals of LVT. It's the sort of perversion that John Redwood would go for.
Neale, fuel duty is a simple tax and it quite proveably "works". Whether you see it as a "tax on carbon emissions" or "rent for road space", it is clearly achieving its purpose of encouraging people to manufacture and drive more fuel efficient cars and to use them less. And if people want to drive gas guzzlers, well good luck to them, they are voluntarily paying over the odds for their simple pleasures and doing net no harm whatsoever.
So going to super-VED instead of higher fuel duty is nuts. The bloke across the road from me has a Lamourghini with several zillion horsepower (on which he no doubt paid £20,000 purchase tax) and he uses it to take his son two miles to school, so he's not using much petrol but bringing joy to the hearts of everybody who walks past this magnificent vehicle. Why should he be punished for that?
@MW
How is the CLA the complete opposite of LVT, (not that I support CLA's)?But they do share the common characteristic of capturing land value for public purposes .And they might deliver big wodges of dosh,might they not?
More intrigued by your outright condemnation:saying its the kind of perversion John Redwood would practise (I paraphrase freely)seems a tad harsh.
DBC, what is supposed to happen with LVT is that the NIMBYs chip something into the pot to compensate people who are being "driven off the land". The way that John Redwood and the CLA people want it to work is that the NIMBYs are being bribed with other people's money to graciously allow a few landless peasants to have a house built.
It's like taking the "peace dividend" and spending it on nuclear missiles.
I think the mistake is to think of the CLA as anything to do with LVT. I don't think it's a bad idea in the world that we live in as opposed to an ideal world with LVT: I've long thought that 100% of the increase in land value caused by granting planning permission should be taken by the state and possibly spent in "the community". The state caused the uplift in values, therefore that additional value belongs to the state.
"The idea of CLA is like "special land value tax collected from newcomers and dished out to existing NIMBYs as a bribe"
Mark, you are either suggesting that everyone who lives in an existing community is a NIMBY or that only the NIMBYs should be bribed. The first is untrue and the second is ridiculous. Also, it would not be a bribe, as I have pointed out above. As you keep saying, "the community" provides the land values, so why should "the community" not benefit in some way from an uplift in those values. Or are NIMBYs beyond the "community" pale?
B, I refer you to my more detailed response to a Daily Telegraph article suggesting exactly that.
MW. The challenge with continuing to increase fuel duty is that it's quite regressive, hitting people who have never been able to afford a modern car.
I did the maths recently, and found that the cheapest car for me to buy at 12,000 miles per year was a brand new car.
I do think other revenue options, such as motorway congestion charging would be a better option to higher and higher fuel duty.
We do need to fill holes in the revenue budgets, but in a world where LVT and carbon tax are not the norm, we're left with a world divided between those of us trying to get pragmatic shift in the right direction, and those who are campaigning on more moral grounds.
What really won't help is for the moral arguments to be filled with distant character assassination, as the Telegraph started, and continued here.
It just makes it even more difficult for the LVT movement to be seen as anything but a bunch of righteous nutters!
Neale, we have carbon tax (it's called fuel duty) and we have LVT (it's called Business Rates). These things work, they achieve what they are supposed to.
And while fuel duty is regressive, the low second hand price of old inefficient cars more than compensates for this (the same as LVT pushes down the purchase price of land).
I am neither Righteous nor a Nutter, I know how the world works and I am deadly serious :-)
Mark, fair enough, but there is nothing to suggest that that loony idea (which is arrant rent-seeking "Don't give the money to the council, give it to meeeee") is actually a Leunig idea or anything to do with his CLA, for which there seems to be some sort of system already in place, i.e. the payments made by developers to the local authorities.
B, nix "but" and said is said.
Tim says:
In a rational world this combination [higher incomes, lower interest rates, higher population] would lead to a lot more houses being built. The planning system has not delivered this. As a result the prices of existing and new houses have risen sharply.
The only way to make houses more affordable is to increase the supply of new houses...
There is much to be said for this [CLA] approach. In particular, it ensures that the council that allows the development gets the proceeds of its decision, and that the existing population who voted for the councillors who allowed the development get the benefits...
D'you see, he says "the only way"? You are far more rabid than I am in promoting the view that more new construction, in isolation, does nothing to prevent increases in house i.e. land prices.
Indeed. Not the only way. In fact, it is now LibDem policy to allow LVT to be charged 12 months after planning consent is granted as per this ammendment to motion F44.
Increasing the supply of houses is actually the autistic economics way to address house affordability. Waste resources building new stuff when we already have stock sitting unused.
The challenge here is where governments get stuck. To have a large increase in delivery would push ALL house prices down, causing negative equity. That's where Adrian's piece on bursting the mortgage debt bubble using Treasury Notes to finance LVCs comes in see page 6 of Progress mag.
Neale: "Increasing the supply of houses is actually the autistic economics way to address house affordability. Waste resources building new stuff when we already have stock sitting unused."
Agreed.
"To have a large increase in delivery would push ALL house prices down, causing negative equity."
Non-issue.
If we did it properly and shifted from taxing incomes to taxing land values, then yes, recent purchasers with large mortgages might be in nequity, but only briefly.
If they commit their massive tax saving (recent purchasers have the lowest land value-to-income multiples and thus most to gain from the shift) to paying down the debt, it will only take about three years to pay the mortgage down to lower than the new lower price of the house and about eight to ten years to pay off the whole mortgage. That's basic maths.
A switch involving big winners and big losers is politically unlikely even with an economic catastrophe in my opinion. In that event, the more likely scenario is same old same old.
I think the YPP knocking at the right door in this regard, and links with PricedOut and other housing and youth related campaigns.
I can see a renters vs rentiers situation as supporting such a transition.
The SFR approach is to aim for sane economics in which almost all would choose it on the doorstep.
N: "renters vs rentier"
I like it - good slogan, sums up a lot of stuff. I personally think that SFR are making it too complicated, but Adrian is top man nonetheless.
"What's not to like?"
Well, the fact that a big chunk of Britain's very successful car industry specialises in premium cars for a start.
AC, yes, and that as well.
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