Thursday, 2 October 2014

Killer Arguments Against LVT, Not (339)

I love it when I get an equal-and-opposite matching pair.

A traditional KLN is "But it's a tax on gardens". Which is clearly isn't. The amount of tax due depends on a plot's site premium, and that depends entirely on where it is rather what it's used for. By and large, the site premium for a flat in a city centre is as much as the site premium of a semi-detached house out in the suburbs.
So here's the equal and opposite argument in today's Evening Standard:

40 per cent of homes targeted in Ed Miliband's £2m mansion tax are flats

Large detached homes make up only one in seven of the London “mansions” that would be targeted by Ed Miliband’s proposed annual tax on properties worth more than £2 million, new research reveals today.

Almost 40 per cent of the homes in the £2 million plus bracket are flats, while more than a third are traditional Victorian or Edwardian terraced homes. Semi-detached properties make up the remaining 12 per cent, according to the study by agents Knights Frank.

In summary: you can't tax homes with gardens because that would be a tax on gardens, and you can't tax flats because they don't have gardens? I rest my case.

And I don't know why they started calling it 'Mansion Tax' when it clearly isn't and was never intended to be. Was it the original left-wing supporters who thought this would make it easier to sell politically, or was it the cunning Homeys who invented the phrase so that ten minutes later they can turn round and say "Ah, but it will catch a lot of homes which are not mansions"??

See also: Labour inventing the term 'Bedroom Tax' to refer to a reduction in the amount of Housing Benefit certain households are entitled to. A jolly good idea in principle but will save f- all money at the cost of massive pain for those affected... as it only applies to council tenants.
The article then runs through the usual equal and opposite fuckwit KLNs that a) those lucky home owners did nothing to earn those land values so it's unfair to put a tax on them; but b) on the other hand, those home owner made sensible investment decisions i.e. gambled on values going up, so it's unfair to put a tax on them.

Boo hoo, shroud wave, sob.

"The government should do better to collect more taxes from large global firms who are profiting from trading in the UK."

Yes, some really large corporations take the piss a bit, but by and large their profits are taxed at very high rates already, near the top of the Laffer Curve and secondly, the tax base is not that big. Total profits of UK companies is in the region of £150 billion, taxed at 30% - 40% (corporation tax + VAT), the mount of money which 'large global firms' earn in the UK but hide from the taxman is not huge, maybe another ten per cent of that, £15 billion? So they're avoiding something like £5 billion tax?

On the other hand, the total annual site premium of UK residential land (gross rental value minus bricks and mortar cost) is in the region of £200 billion a year, currently taxed at very low rates indeed and very haphazardly at that (SDLT and IHT).

So if the government has the choice between a) hiking the tax rate on business and seeing revenues stay much the same or even fall and b) collecting a bit more from a much larger pot where there are no Laffer effects, what 'should' it do?
Finally, it's perfectly acceptable for Tories to lie about and deliberately misinterpret Labour policies and vice versa, that's the fun of politics.

What bugs me is when Labour MPs misrepresent their own party's policies:

Glenda Jackson, who represents Hampstead and Kilburn for Labour, said: “It will impact disastrously on people who are asset rich but revenue poor, particularly pensioners, who bought their houses many years ago and through no fault of their own have seen the value rise because of the ludicrous London house prices.”

You stupid bloody cow.

Ed Balls has made it perfectly clear that Labour's general policy is to extend the ATED charge to all homes and give pensioners a roll-up and defer option.

Stick to lying about and misrepresenting Tory policies in future, would you, darling?


Bayard said...

Actally, as much as I disagree with Glenda, I think it is good when MPs refuse to toe the party line, even if it's only to save their own jobs at the next election. That's possibly the only thing that Labour does better than the robotic Tories.

Mark Wadsworth said...

B, I don't mind MPs refusing to toe the party line, I mind MPs who don't understand their own party's policies.

So Hooey has always stuck up for fox hunting, that's a point of principle and not a misunderstanding.

But Jackson was playing the Poor Widows In Mansions card even though Ed Balls has already explained perfectly clearly that there'd be a roll-up option.

(I have it on good authority that in NI they abandoned the roll-up option for Domestic Rates, not because too many people were abusing it but because only a dozen people were using it in the first place.)

Dinero said...

85% are not even detached houses.

I don't what it is - at the national level , but at 85% it not just its name, but also its explantation that is out of wack.
You are looking at it through the lense of LVT but this is being sold at the personal level. In reality someone living in a 2M terraced house in London is simply not seen as richer, or having a better standared of living and accomodation, than someone living in a 1.8M three story 20 room detached house in the country side with 5 Acres.

Bayard said...

If Glenda is misunderstanding, I bet she's misunderstanding wilfully.

L fairfax said...

"Labour inventing the term 'Bedroom Tax' to refer to a reduction in the amount of Housing Benefit certain households are entitled to. A jolly good idea in principle but will save f- all money at the cost of massive pain for those affected... as it only applies to council tenants."
Wasn't this already in operation - and started by Labour - for private tenants who get housing benefits