Andrew Marr demolishes Gordon Brown

A lot of people think that Andrew Marr is far too soft on The Goblin King. Having watched several interviews over the years, I strongly suspect that Marr despises him with a passion.

Today's killer question was dead simple;
"Well let's just continue with the economy for one further round, which is that a lot of people would say actually what's happened over the last ten years is we've had a huge boom on the back of vastly inflated housing prices, and unsustainable personal borrowing, and as Chancellor you never tried to stop that happening. You went along for the ride and you didn't warn people. And that's what's gone wrong now."

The Goblin King just waffled the usual waffle about low interest rates, high employment, economic problems in the USA, hard working families blah blah blah. It is difficult to tell whether he really is that out-of-touch with reality.

But this is the whole point! Marr summarised the whole 'Brown Bubble' in one short question!
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What could The Goblin King have done to prevent this? Let's jump in a time machine back to 1997 and imagine that the new government had had the nerve to scrap all property related taxes*, total annual revenues est. £30 billion. Remember that UK gross government debt under Maastricht criteria was around £400 billion when Nulab took over and stayed at that level under the spending splurge really took off in 2002-03, since when it has been increasing by about £40 billion a year, so cutting taxes by £30 billion while the economy is growing is not particularly reckless.

As a quid pro quo, and to prevent property price bubbles, they could have introduced a Property Bubble Tax. Very briefly, the tax would be charged at 10% of the difference between property values at the end of each year and their values as at 1997 (I have a cunning plan how to do work this out, but that's not important right now).

Such a tax would have acted like a much higher interest rate on the speculative element of property prices; I'd guess instead of trebling they might have gone up in line with average incomes, in other words up by 60% - 80%.

The total revenues raised by the tax might end being more or less than the current revenues from property-related taxes of about £60 billion, that's not so important. If it raised little or nothing, then great, it's achieved its aim of keeping property prices low and stable (and prevented the corresponding credit bubble). If it raised more, then great as well, we could use the money to cut the really bad taxes like VAT, Employer's National Insurance and on increasing the tax-free personal allowance.

And as property prices reflect people's expectations about the economy, it would be counter-cyclical in the down-turns as well, in other words, right now, when prices are falling again - especially in commercial property - at least people would see automatic tax cuts.

* Here's the list, for clarity; Council Tax, Business Rates, Stamp Duty, Inheritance Tax, TV licence fee, Capital Gains Tax, VAT on domestic fuel, Insurance Premium Tax, s106 agreements, 'roof taxes' and anything else you can think of, less subsidies for land and property, such as Council Tax Benefit, agricultural land subsidies, VAT zero-rating for new residential construction etc etc.