From the Daily Mail
But from the economist’s point of view, it is a tax that is set at an arbitrary level with no economic justification for that level or the rate imposed except to raise a certain amount of money.(1)
It can therefore impact negatively on markets and distort their proper functioning.(2)
It creates uncertainty and has an even more serious flaw – it is an inefficient tax.
A widow who bought a house decades ago which has risen in value(3), or a young professional family with children, may both occupy houses in a particular, fashionable part of a city. But they do not have the disposable income to pay a tax which may vary from home to home in the same street.(4)
I don’t take issue with sensible moves by the Government to introduce a stamp duty(5) of 15 per cent for residential properties of £2 million or more which have been bought through a company rather than directly by an individual. In last year’s Budget, we saw an increase in stamp duty for properties above £2 million from five per cent to seven per cent. All well and good.
(1) Nearly all tax rates and levels are to some extent arbitrary. A mansion tax of £2m seems a pretty good way to test the water and see what happens with LVT. Do lots of big houses become empty in London, or do Arab Sheiks and Russian Oligarchs just hand over a few notes rather than buying a new centre forward?
(2) The housing market is already distorted by government improving railway lines, building new roads or rubbish tips. One could argue that LVT is a correction to those distortions.
(3) The Cuddly Toy!
(4) So, move, then. If I was lucky enough that someone offered me double the value of my home, I'd bite their hand off because I don't need to be where I am. I'd rather take the money and move somewhere cheaper. This is one thing that's forgotten about the poor widows: they just got lucky. They didn't improve the value of the valuable homes that they're in. They were the people who owned housing in London before various governments over the past 20 years poured money into it. Dumping a load of tax on them is a small correction to the 20 years of living well off the rest of the country for that time.
(5) eh? stamp duty? sensible? She might want to check the snout she was given inside.
Monday, 16 September 2013
From the Daily Mail
My latest blogpost: Is this Pryce woman really an economist?Tweet this! Posted by The Stigler at 18:21