Friday, 13 February 2015

Killer Arguments Against LVT, Not (352)

A Lib Dem commentator explains that adding more council tax bands at the top is much neater than having a completely separate 'Mansion Tax'.

Fair enough, but he then maintains that the proceeds should be paid to the central government to fund the NHS (which is meaningless gibberish).

A commenter fixes that problem deftly:

Money is fungible and therefore, since any money raised from an increase in council tax then syphoned off to central government would go as much to fund Trident and HS2 as the NHS.

It would be better, if you are going to have further bands, to allow the local authority to keep the money but simply reduce their government funding proportionately to avoid an unnecessary new level of bureaucracy that would be needed to syphon off the additional council tax.

But then resorts to Home-Owner-Ist lies to justify a variant on the old KLN:

As a thought experiment, how is it just and fair that I, who made the decision some years ago to stay in London and invest money in a home, should be taxed for that whereas some better paid peers(1) who decided to move to the commuter belt and invested their money in stocks(2) and pensions(3) and fast cars(4) instead will not be taxed at all?

"Not taxed at all"?


1) If they were 'better paid' then they paid more income tax and NIC.

2) If you own shares, then you are very much taxed! The company pays a load of taxes on your behalf whether you receive a dividend or not. If you are a higher rate taxpayer, you pay a further one-quarter of the dividend as income tax.

3) There's tax relief for pension contributions which is partly cancelled out by income tax on pensions. But the majority of pension fund investments are shares which carry a high tax bill, see above.

4) There's VAT on new cars, VAT and fuel duty on petrol, and car manufacturers have to pay a load of tax like any other business (see 1). On average, each vehicle in the UK generates about £1,500 - £2,000 a year in tax (on top of the taxes which the manufacturer/importer has to pay), and twice as much in total as Council Tax.

Housing in London has increased in value far, far more than stocks and shares over the past twenty or so years.

So this complainant probably 'invested' very little in his home (tens of thousands of pounds, probably) and got the rest for free. If this man would rather live in the commuter belt and have money left over for shares, pensions and a fast car, then he can sell up and move, can't he? All in all, he'll still end up better off than his 'better paid peers'.


Random said...

Granuad complaining about the tax code:
Teh rich have made it complicated.

Mark Wadsworth said...

R, I dunno. Do you think that's true?

I assume that those 17,000 pages are a job creation scheme for lawyers, accountants and civil servants.

Bayard said...

Mark, having once been a civil servant, I can vouch for the fact there is a strong feeling, that if you can only make the wording comprehensive enough, you can regulate your way to a perfect world.