Killer Arguments Against LVT, Not (452)

I've not done one of these for a while, mainly because there aren't any but the Homeys haven't even bothered rehashing old ones.

From here, two years ago:

Chris: The average income is £27k a year, a yearly increase in tax of £2,591 to a household with one working parent would represent almost a 10% increase in income tax.

Any Government that attempts this will make the poll tax riots look like minor in comparison and even more so when their manifesto states that no one earning under £80k a year will pay more tax – it would be a blatant lie.

Most people are only vaguely aware of how much income tax and NIC they are paying; very few are aware of how much NIC their employer is paying (average £2,000 per employee p.a.) or how much domestic tariffs (VAT) cost them (average £4,000 per household p.a.). People only care about Council Tax because they know how much it is (average £1,000 per household p.a.).

Administratively, the best way of collecting LVT is through people's PAYE codes, i.e. deduct directly from wages or private pension, get it over with, it's a straight swap - LVT instead of income tax/NIC.

People care most about their net pay, so if the LVT deducted is less than the reduction in income tax/NIC, and no visible Council Tax bill, people will be fine with it.

We can divide UK households into four categories
- working owner-occupiers (about 40% of all households)
- working private tenants (about 20% of all households)
- pensioner owner-occupiers (about 20% of all households)
- people in social housing (about 20% of all households, a mix of working, not working and pensioners)

Let's boil it down to five households (two in category 1 and one in each of the others) and assume income tax/NIC is reduced by £5 and £5 is collected in LVT instead.

The three working households in category 1 and 2 are currently paying one-third of the income tax/NIC each = £1.67. Thereafter, the LVT on each home is £1.

1. The two households in the first category will each save £1.67 and pay £1 LVT instead; their net pay goes up by 67p.

2. The household in the second category will save £1.67; their net pay goes up by £1.67.

3. The pensioner household is now paying £1 more tax; if they can't afford it, they can roll up the unpaid tax and whoever inherits the home can pay it.

4. For people in social housing it is difficult to say who pays more or less; on the whole it will average out to not much either way.

5. Landlords will be paying a shed load more in tax, but it's a tiny minority of people.

I find it unlikely that pensioners, their greedy heirs and landlords are going to start riots, so it's not a problem. Usual rioters are the young unemployed and students, who are tenants, least affected by the shift to LVT and more likely to find a job.

Chris also overlooks that the Poll Tax Riots happened because Thatcher wanted to get rid of a progressive tax (Domestic Rates) and impose a regressive one (Community Charge).

By reverse logic, they won't be any riots if a government did the opposite, and replaced regressive taxes (especially NIC, Council Tax, VAT) with a progressive one (LVT).

So his argument is about as fucking stupid as Richard Nixon saying "Students rioted when LBJ and I ramped up the Vietnam War. Therefore we can expect them to riot again if I throw in the towel and withdraw troops from Vietnam."