Emailed in by MBK.
The first bit is boilerplate Homey:
Labour’s proposal for a mansion tax, under which all properties above a market value of £2 million would be subject to a levy, is a third way in taxation...
The real purpose is political. This is not a tax on property so much as a tax on the southeast of England. Of the 95,000 homes in the UK that would qualify, 95 per cent of them are in London and the southeast. The whole of Britain north of, and including, Birmingham would pay little more than 2 per cent of the total.
This is taxation as pure political calculation.
But then he lets loose with this, it's hard to disagree:
Not that I wish to discredit the notion of an impost on property. On the contrary, the case for taxing property more heavily than we do in Britain is persuasive.
Unlike income, property is hard to hide and a levy upon it correspondingly difficult to evade. It would generate a lot of money from foreign owners who are contributing little to the exchequer. Revenues would usually rise with prosperity and if the volatility of the housing cycle were flattened a little by heavier taxation, then so much the better.
The case is intellectual as well as practical. The state takes £700 billion a year in taxation and that sum should ideally be collected according to a principle that is widely agreed to be fair. Income, which is directly earned, should be taxed lightly and a party by the name of Labour ought to be the most vocal proponents of low income tax.
The bonanza of house price inflation, though, is not income that I have genuinely earned. It is a reward that, in JS Mill’s arresting image, falls into my mouth as I sleep. There is a case for returning to the principle that informed Lloyd George’s “people’s budget” of 1909. This is an argument that, with enough time, can be joined and won.
Taxation in Britain has no such philosophical order... Only 5 per cent of the tax take comes from land and buildings.
The beauty of the green and pleasant land as a taxable asset is that it retains its value because there is a fixed supply of 60 million acres and the maker has stopped making it. The windfall gains from land are often the result of public infrastructure development, which should be taxed. A levy of 1 per cent on the land would yield £50 billion. Once the deficit had been cleared, income tax could be cut by a third or corporation tax abolished.
A truly radical Labour party would have been making this case for years... The place to begin in policy terms is not a crude, cliff-edge mansion tax but a revaluation of the council tax that is still, absurdly, calculated on 1991 prices.
As to the wailing about Mansion Tax or SDLT or LVT or anything else being "a tax on London", well that's because they are taxes on land values and land values are highest in London, or on various beaches along the south coast. You might as well say that income tax is a tax on London because people have the highest wages there.
Savill's did a breakdown this month; the total value of all UK housing is currently £5,750 billion (which includes a very low estimated market value for social housing units of £72,000 each).
Housing in greater London is one-quarter of the total, and the South East is another one-fifth, so between them, you'd expect about half of taxes on land and buildings to be raised from London and the South East.
Those two areas generate 'not enough' in Council Tax but 'too much' in SDLT (people in those areas also probably pay or generate 'too much' income tax but 'not enough' in VAT, to be honest). If you treat the £1 or £2 billion Mansion Tax as Council Tax Bands I to M it nudges their share to roughly 45% or a half, or whatever, so big deal.
It's nice to see the 1% = £50 billion calculation mentioned, I helped launch that one.
Friday, 23 January 2015
Emailed in by MBK.
My latest blogpost: I was surprised to see this in The TimesTweet this! Posted by Mark Wadsworth at 16:27