Wednesday, 27 November 2013

Killer Arguments Against LVT, Not (309)

From The Evening Standard:

Ms Jowell, MP for Dulwich and West Norwood, said: “I’ve thought a lot about the mansion tax dilemma and I represent a constituency where it would be an issue for some people.

“Not because they have a fabulous income and lots of disposable capital, but because they are people who bought homes maybe 20 or 30 years ago for a fraction of what they are worth now. They are people maybe becoming elderly who are asset-rich and income-poor.

“It’s fine to say we’ll impose a mansion tax, but for these people they would have to move out of their family homes. Let’s be wary of the perverse effects of that. What might be better is two or three more council tax bands … looking at the top end like that.”

Good one Tessa, I've never heard that problem highlighted before.

Now let me think for a few milliseconds… how about we, er, just give such people the option to roll up the tax, and defer payment until they die or sell their home? That general principle applies equally to having more council tax bands at the top end, it's all the same thing. If that means getting rid of Inheritance Tax and SDLT, then so much the better.

One thing the Homeys can never answer is: how did old people manage in the good old days when we had Domestic Rates, how do they manage in the many countries where the tax is proportional to the value of the home (USA, Switzerland, Australia etc)?


Bayard said...

Come on Tessa, don't hold back. Please produce a real live PWM, I've never ever seen one and I always wondered if they really exist.

Mark Wadsworth said...

B, there must a a few, maybe a tenth of all pensioner households or something who wouldn't be able to afford a mansion tax/domestic rates/lvt etc if were brought in without the deferment option.

Remember, total pensions in payment are about £170 bn a year, from which about £13 bn income tax is withheld.

Under a fairly full on LVT at about 3% of current selling prices, pensioner households would have a total bill of about £40 billion.

So on the whole, they very much can afford to pay it out of current income, but there are bound to be a few cases of genuine PWIMs.

Bayard said...

So you would think, but I've never seen one produced, PWM's are always referred to in the abstract, never as Mrs Smith, 95, husband killed in the war, bought house for £5 in 1945, now worth £2M, scrapes by on tiny pension etc etc.

Mark Wadsworth said...

B, I know of two:

Krusty Allsop, Homey from Hell, often refers to her parents who are in that position (i.e. 'family home' bought for a fiver, now worth millions). She never said how much their pensions are, or why she wouldn't merrily pay the tax for them (instead of making everybody else pay it), but there you go.

One of our YPP members is in a similar position.

The Stigler said...

for a fraction of what they are worth now

So they should consider blessed that they got such an untaxed windfall for so long.

If this was a company that had got rich as a result of the government throwing money at them, or selling something on the cheap, Jowell would be spitting feathers.

The problem with the two main parties in this country is that they're run by old money types now. The day's when a builder's son or a grocer's daughter led a party are long gone.

And if you look at where UKIP is getting votes, it's the provinces. The places that actually make this country rich. People aren't going to keep on supporting parties that are bleeding those places dry to support London.

Ben Jamin' said...

Even under a MT a poor widow in a Council Tax band A will always be paying nine times as much tax as a % of her property's value as a PWIM.

That is still a transfer of wealth. Up.

Bayard said...

"One of our YPP members is in a similar position."

Wow, a real live PWIM! Have you told her that an career in the meeja beckons? I wouldn't necessarily believe anything Krusty says.

Mark Wadsworth said...

BJ, yes of course, thats' the whole point of HOism.

B, it's a couple, actually. He's still a full-on LVTer.

Bayard said...

A couple doesn't really count. I suppose the wife could always pretend to be a widow, I'm sure the DM wouldn't mind.

Ben Jamin' said...

In Singapore, their property tax rises as a % of a property's value.

So it's progressive.

What an evil, poor widow hating race these Singaporeans must be.

Obviously Communists, but even so, picking on defenseless muti-millionaires is really scraping the bottom of the barrel.

Anonymous said...

BJ: in Singapore, old people live with their children.

Ben Jamin' said...


Clearly forced to by a cruel and onerous tax regime.

Yes, I know they more millionaires per capita than anywhere in the World( one in 6 is a disposable income millionaire. It would be many times higher if property was included).

But expecting children to look after their elderly parents is the sign of a sick society if you ask me.

Kj said...

BJ: true that. In the dark ages of yore, elderly people was part of family life, minding the kids, having people to talk to. Good thing we´ve largely abolished that.

Anonymous said...

BJ: A sick society is one where you would rather have some east European or west African "carer" wipe your parents' shit off their bums while you are waiting for them to die so you get all their money.

I've received my so-called inheritance a long time ago and in return I take care of my parents. Clearly you would just take the money and leave them to rot once things go downhill.

Ben Jamin' said...


I was being sarcastic, sorry.

In the UK any attempt to even remotely even out our property tax system(it falls disproportionately on the poorest) is rejected because it is said it was hit the asset rich/income poor ie pensioners hardest.

The point being, most Countries have a flat property tax, and in Singapore it is progressive(like LVT would be, eventually).

Do rich pensioners in these Countries, Singapore in particular feel victimised?

Are young and old at war?

Ironically, it feels a bit like that in the UK.

Can we learn something from observing the HK and Singaporean tax system?