Thursday, 12 February 2015

Killer Arguments Against LVT, Not (351)

Even The Times has tired of wheeling out Poor Widows In Mansions...

In my Father’s house are many mansions, Jesus said. Which may be bad news now that Labour is preparing its mansion tax.

Figures presented to the General Synod show that the average value of a Church of England bishop’s home is £2.26 million, putting it above the £2 million tax threshold.

It has also emerged that 26 diocesan bishops live in a property with seven or more bedrooms...

Wiki says there are 66 bishops of all ranks.

Wiki also says that the Church of England has total income from various sources and expenditure of around £900 million a year.

Let's assume that these palaces fall into the £2 - £5 million band and the Mansion Tax is the same as the ATED charge of £23,350 a year.

66 x £23,350 = £1.5 million, i.e. one-sixth of a per cent of the Church's total income/expenditure every year (or a small fraction of its direct government subsidies).

Hardly the "threat" suggested in the headline to the article, is it?


Derek said...

And in other news...

Okay, her husband's still alive at the moment. But is the Church of England setting the ground work for a new record some time down the road?

Poor Widowed Bishops in Mansions

Mark Wadsworth said...

D, hehe, let's pencil that one in.

Kj said...

Among so many other obvious and not so obvious advantages of LVT, it's the equal treatment of for-profits, non-profits, and the church. None of all this faff with treating income generated by different types of businesses equally. A straight swap for VAT would immensely benefit orgs like the church, who don't get refunds AFAIK, they could actually afford to maintain the useless old heaps.

Bayard said...

"they could actually afford to maintain the useless old heaps."

Are you referring to the clergy, who are paid for by the Church, or the buildings, whose maintenance and the paying for thereof, is the responsibility of the parish?

Random said...

Dosen't the Bible say something about land being 'a gift to all of mankind' or something?

James James said...

One question to be dealt with during the transition to LVT is whether charities get exemptions. Charities like private schools and the church own a lot of land, the rent of which they put towards their charitable purposes, e.g. the school uses the imputed rent from its playing fields to provide playing fields to its students.
Either the school gets an LVT bill equivalent to how many houses can be built on the playing fields, or it gets an exemption, i.e. a subsidy. If the government’s going to give subsidies to charities, it’s better to be explicit: give them a full LVT bill, and then write a cheque for the subsidy, so everyone can see what’s going on.

If the schools and the Church don’t get subsidies, then there’s going to be a massive social upheaval, even Constitutional change. Most CofE churches won’t generate enough money to cover the bill, and will be shut down and turned into flats.

Perhaps the government would decide to give exemptions to St Paul’s Cathedral, or say that it gets a lower LVT bill because it’s a listed building. Listing a building could become a stealth way of giving an LVT exemption.

James James said...

One reason school vouchers don’t work without LVT is that new private schools can’t compete with existing state schools which own their freeholds. The government gives £7000 per pupil to state schools which they can spend entirely on tuition because they don’t have an LVT bill. The true cost is much higher. Whereas if the government gives £7000 to a new academy which doesn’t own its land, most of it goes to the landlord, with little left over for tuition.
The government currently gets around this by buying land for approved new academies, which misses the whole point of not needing government permission to set up a school.
With LVT, the government would just give out a much larger voucher, and then get part of it back through the LVT bill.

This would be an improvement both because it would enable a voucher policy to actually work, but also because it would encourage schools to move to lower-value areas. You want to live in Zone 1? You pay for it through LVT. You want to educate your children in Zone 1? You pay for it through LVT.

Mark Wadsworth said...

JJ, you are straying into KLN territory.

As you seem to suggest in your second comment, money is fungible and a tax break and a cash subsidy are the same thing.

So if a state school is given a budget of £5 and exempted from £2 LVT this is exactly the same as giving it a budget of £7 and asking it to pay £2 LVT.

If state schools are exempt then so are private schools, if state schools have to pay it, then so do private schools.

Charities don't particularly need land or large premises so no reason to exempt them.

As to the Church of England, you don't need special rules. What's the rental value of a church? Not much.

Graeme said...

Surely, given the recent statements by Justin Welby on tax avoidance/evasion (of which he seems to demonstrate an incomplete command), he would welcome the chance for the CoE to pay tax, the more tax the better.

Mark Wadsworth said...

G, it wasn't the Archbish complaining about mansion tax - it was the Homeys at the Times complaining on his behalf whether he likes it or not.