Outbreak of Common Sense

A new report by the TaxPayers’ Alliance details the enormous savings to British taxpayers by legalising cannabis. The UK could save at least £891.72 million a year in reduced spending by police, prisons, courts and the NHS through pain relief treatments.

Yes, this is all old hat and sane people have been saying it for years, I'm just pleasantly surprised that the TPA, the staidest and most small 'c' conservative of all pressure groups would even broach the topic.

(A list of their recent donors might give a clue as to why the sudden change of emphasis...)

Outbreak of common sense at the TPA!

Wonders never cease!

From City AM:

The TaxPayers' Alliance has suggested that business rates are a “bad tax” and could be replaced altogether.

The campaign group proposed several reforms to the current system including automating revaluations annually to avoid so-called “cliff edges” when business rates suddenly jump...

The TaxPayers' Alliance said it was time to review the entire system, and to consider replacing it completely with a land value tax.

Correct. If you strip out the bad bits from Business Rates, SDLT, Council Tax and so on, what you are left with is Land Value Tax.

Simon Walker: Chairman of the Institute of Rent Seeking Parasites,

From an article entitled "Entrepreneurs will reap the rewards of business rates change", Simon Walker, Top C**t at the Institute of Directors writes, "Ask a small business what bothers them most on a daily basis, and it won’t be long before they raise the dreaded spectre of business rates. For many small businesses, it’s of more concern than corporation tax (a tax on companies’ profits the rate of which depends on the amount of profit)."

This is the Poor Widows in Mansions argument, but even more pathetic as it's made in defense of businesses clinging to the security blanket of imputed rent.

Firstly Walker ignores that taxing profit IS the tax on business. The better you are at making a profit, the more you get penalised for doing so. Walker appears to think this is fair compared to paying the fixed cost of rent.

Secondly, even Walker must know his point is only relevant to owner occupiers. It makes no odds to tenants if they are sweating over paying their rent to a private landlord or the Council. Yet, Top C**t Walker chooses to gloss over that pretty important point.

Thirdly, Walker chooses to ignore the role of rent in allocating valuable location and fixed capital. Rent is the market's way of saying, that one Capitalist is prepared to pay X amount to exclude others from using those resources.

If  businesses are sweating if they can pay the rent or not, this shows the market is working as it should. Efficiently.  If they cannot turn a profit and lose that premises to someone else, that is a GOOD THING.

It's truly ironic that a Lefty like Carol Wilcox at the Labour Land Campaign is more of a hardcore capitalist than the IoD and TaxPayers Alliance.

In their joint policy document cited by Walker in the article " 2020 Tax Commission" they recommend scrapping  property taxes in favour of locally collected sales taxes.

Why? Because they do not want competition. Paying Business Rates puts owner occupiers in direct competition with renters. VAT provides a barrier to entry for small businesses.

The members of the IoD and Chambers of Commerce don't care if this shrinks GDP. It protects their shareholders interests and their place on the board.

For Walker to invoke entrepreneurism as the beneficiary for cuts to UBR is sickening. It's no good blaming the politicians. They just do whatever the fake-Capitalists tell them to.

Jeremy Corbyn vs The Taxpayers' Alliance - what if they are both right?

In the Red Corner, Jeremy Corbyn, suitably fired up by Richard Murphy and his ilk, wants to reduce corporate subsidies, which they claim amount to £93 billion a year.

I have a nasty feeling that they started at the wrong end when they calculated this, see e.g. here. In other words, they are looking at the extra tax which they think businesses ought to be paying; and that £93 billion figure is plucked out of the air.

But I do have some sympathy with the general approach and, as we will see, their £93 billion number is - probably by luck rather than judgment - actually not far off.

In the Blue Corner, we have the Taxpayers' Alliance, who know bugger all about 'tax' and deny there is an implicit subsidy to landownership, but do absolutely sterling work when it comes to identifying public sector waste and overspend see e.g. The Bumper Book of Waste.

I have a lot of sympathy with their approach as well.*

How do we reconcile the two? Always start with the facts.

According to HM Treasury's Public Expenditure Statistical Analyses 2014, Table 5.3, govt spending on goods and services acquired from the 'private sector', plus grants and subsidies are £258 billion a year (38% of total govt spending); public sector pay and pensions are £174 billion (26%) and welfare and pensions are £242 billion (36%); and out of that 36%, two-thirds is old age welfare and one-third is working age. (The other bits and pieces net off to nothing, ignore those).

How much of that £258 billion paid to the 'private' sector is waste and/or overspend? What does the TPA say? Think about Ministry of Defence, NHS IT projects, PFI projects, all this nonsense. The cost of over-employment in the public sector is small change in comparison, despite all the revolving door quangocrats on six-figure salaries.

If we conservatively assume a quarter of that £258 billion is pure waste/theft/overspend that's £65 billion straight off. Add to that most egregious tax break of all, tax relief for pension contributions of £30 - £40 billion, all of which is creamed off by 'the pensions industry' and none of which actually goes into higher pensions? Bung in third world aid and gross EU contributions (about £20 - 25 billion in total), which are largely recycled back to 'private' UK businesses, and £93 billion a year is not far off, and might well be an understatement.

That's how you plug deficits, not by twatting about persecuting welfare claimants to shave of a few billion a year at most.

* Where it gets tricky is because people draw an artificial distinction between cash spending, subsidies and overly generous tax breaks i.e. exemptions. The biggest single subsidy/tax exemption is the fact that the £200 billion a year implicit subsidy to residential land is not clawed back with a direct tax/user charges. Most households pay far more in taxes on income and spending than they get back in land freebies; it is only the top One Per Cent who cash in. But put that to one side for now.

This is what you want, this is what you get.

From yesterday's City AM:

On 30 March when parliament is dissolved, as the majority of MPs will gear up to embark on the toughest part of their election campaigns, some will bid farewell to the Commons for the last time as they step down from public life.

But among the 77 MPs leaving office, many will be left with a valuable memento of their time in office - a second home part-subsidised by taxpayers.

Now research by City A.M. and online estate agent Emoov estimates that between them, MPs stepping down at the end of this parliament could stand to make more than £9m of gains on properties previously funded by taxpayers.

It is quite surprising that two of the biggest cheerleaders for Home-Owner-Ism, City AM and the TaxPayers Alliance (or more accurately, the financial backers of those two), who are always pushing for more direct and indirect subsidies to landowners and ideally a tax exemption for all land based profits, are taking the line that maybe massive windfall gains on London homes are not so hard-earned after all.

There's no honour among thieves is there? Without these hard working MPs, nobly nodding through Help To Buy, bravely blocking Council Tax revaluations and heroically hiking VAT and NIC to finance a Council Tax freeze, the backers of City AM and the TPA would be well out of pocket.

Killer Arguments Against LVT, Not (350)

The Taxcollector's Alliance have churned out more misinformation in The Times:

It’s not just incomes that politicians have increasingly helped themselves to. The amount that people have had to pay the government to buy a home has hugely increased over the past half century.

According to the building society Nationwide, in 1958 the average house price was £2,050. Stamp duty wasn’t payable until you bought a house for £3,500 — 71 per cent more than the average. Even then it was levied at 0.5 per cent.

If that were still the case today, you wouldn’t pay any stamp duty on homes worth less than £323,000. Instead, even after the reforms made at the autumn statement, families buying the average house today for £271,000 have to write the government a cheque for a whopping £3,550.

a) Does this man not think about what he writes? He describes £3,550 in SDLT when you buy a house to be a "whopping" amount of money. Fair enough, that's his opinion and he's entitled to it. But what about the other £271,000 a buyer has to hand over? Is that a mere trifle?

b) Adjusted for inflation, £2,050 in 1958 is £43,144 today, i.e. close to build cost and the land was more or less free. Two-thirds of the £271,000 today is land value, it is privately collected tax.

c) He fails to mention that for all but the cheapest homes, Council Tax is considerably less than 1958 Domestic Rates would be, adjusted for inflation. Thus completely disproving his next point...

... a YouGov poll late last year showed 72 per cent of the British public in favour of a so-called mansion tax. Given that Labour has already allocated to the NHS the projected £1.2 billion that it will raise, if revenues fall short they will have to either cut NHS spending, or increase the tax. There’s no doubt which option they’d go for.

If the mansion tax is introduced, it will be here to stay and most of the 72 per cent in favour will end up paying the price. We must ensure it’s never allowed to see the light of day.

a) If this were a Poll Tax, then yes, the 72 per cent ought to be worried about it. But the Mansion Tax is an ad valorem tax. So even if it were 1% or 2% of the price of a house, people in average houses wouldn't be paying that much. Just like people on low to average incomes don't pay much income tax (they pay far more in NIC and VAT than in income tax).

b) House prices would fall by the amount of the tax, so future buyers will be unaffected and, after a few decades, everybody will be unaffected. You could argue that some people who inherit in future will be worse off than they would have been, but other people will be better off, so that cancels out.

c) The Mansion Tax or LVT or whatever has exactly the opposite effect to government deficits. LVT shifts taxes from the future to the present (and ultimately, into the past), government deficits shift taxes from the present into the future.

Call me boring, but I actually do worry about government deficits* and the national debt, and I do support LVT over other forms of taxation, so I'm at least consistent.

* I voted Labour in 2001 because from 1997 - 2001, they managed to reduce the national debt as a % of GDP slightly. History proved me wrong on that one.

Killer Arguments Against LVT, Not (329)

BenJamin spotted two for the price of one over at the TPA:

Britain already has the highest property taxes in the OECD (see chart), mostly in the form of council tax. Some claim a higher purpose to property taxes than merely soaking the supposed rich – that of putting a lid on property prices.

If that’s the hope, then it is equally misplaced, for such taxes plainly haven’t done much good so far.

That's a good old-fashioned lie.

UK commercial premises have just about the highest annual property taxes in the world (Business Rates) but Council Tax on housing is low by international standards.

If you deduct the £700 per home Poll Tax element, the amount of Council Tax which relates to the value of the home is negligible (about 0.3% of its value up to the first £1 million or so, nothing above that).

Which is why commercial land is cheaper than residential land, and why developers can make windfall gains by getting commercial rezoned as residential - they can get rid of three-quarters of the annual tax at a stroke. And which is why the bubble in commercial prices was much smaller and shorter lived than for residential.

As for so-called “granny” clauses, allowing the elderly to roll up their liability until death, this hardly solves the problem. The eventual fire sale of baby boomer homes would only further undermine house prices down the line.

He appears to assume that lower house prices is A Bad Thing, which is not true. And as Ben points out in the comments, the author of the piece himself says that the best way to get prices down is to build more; assuming this to be true (it isn't really), this would imply that he thinks lower prices are A Good Thing.

Either way, when houses are inherited, they are usually sold. So the number of such houses being sold depends on how many widows or widowers die each year, which is a fairly fixed figure, about three hundred thousand a year.

In the absence of a crystallised LVT bill, presumably slightly more of those houses would be kept and rented out by the heirs; but they would be rented to the people who would otherwise have bought them.

The TaxPayers' Alliance way off piste as per usual

From City AM:

TODAY is tax freedom day, according to the Adam Smith Institute... The day represents the portion of the UK’s national income needed to pay direct and indirect taxes, collected by central and local authorities. Today, 41.09 per cent of 2014 is over – the same proportion of the UK’s income that is collected in tax.

Despite the day coming earlier than it did last year, “cost of government day” is still far ahead, coming on 26 June. The second day comes nearly a week earlier than in 2013, but the month-long gap between the two events illustrates the difference between what the government collects in tax revenues and what it shells out in spending...

The Taxpayers’ Alliance also weighed in on the findings, saying that the average household spends more on tax than on essential items like fuel, clothing, food and housing. The typical tax bill comes to £9,415 and the essentials run to £7,727, according to the group.

Where on earth do they get £9,415 from?

According to the PSFD, page 22, the UK government spent £640 billion in 2013-14 (of which approx. £540 billion was collected in tax and £100 billion was extra borrowing).

So the average tax paid per household was (say) £21,000 and the median is maybe two-thirds of that, £14,000.

And seeing as extra government borrowing is just deferred tax, the true average is £24,000 and the median is £16,000.

While the TPA are really good when it comes to pillorying government waste and theft, they don't understand the tax system, they say that Council Tax is the biggest single bill paid by households etc. Who pays the piper, I guess.

(As MMTers point out, the government doesn't actually collect tax money and then spend it. The government creates money by spending it and then, to prevent hyper-inflation, destroys a similar amount of money by collecting taxes. But that's another topic.)

UPDATE: Dinero queried the MMT logic and Derek explained it rather neatly:

It's just an accounting thing, Dinero.

You can look at the government as collecting existing pound notes into the Consolidated Fund and then spending them, or as creating new pound notes for spending and destroying the old ones collected for taxation.

Either way works for the accountants but the advantage of thinking about it in the second way is that it makes it clear who creates the pound notes and when.

The TwatPayers' Alliance...

... expose their rank ignorance yet again in today's City AM

The government has done some good work to encourage new growing businesses. One measure that stands out is the abolition of stamp taxes on Aim-listed shares. This will make it easier for firms to raise equity finance.(1)

...If you build a business, you will pay a series of different taxes on your earnings: corporation tax when you first make a profit; income tax when those profits are paid out as dividends;(2) and capital gains tax on any attempt to realise the value of future profits.(3)

The same income is effectively taxed three times.(4) Taxing the same income repeatedly is always an unfair and inefficient way to raise revenue, but it is insane when we are talking about the engine of economic growth, the process that creates jobs.

... The 2020 Tax Commission – organised by the TaxPayers' Alliance and the Institute of Directors and released in 2011 – recommended going further and establishing a single tax on income when it is distributed, however it is distributed.(5)

Remove the extra taxes like capital gains tax, and you can make Britain a more competitive location for international investment (6) and create the right environment for more of the high growth businesses that create opportunities for everyone.

... There are many who will never want the worries and risks of starting their own business. Not everyone wants the bigger mortgages that government guarantees under the Help to Buy scheme make possible. They want the opportunity for a job that is better paid and more fulfilling. A job that will allow them to save up the money they need for a mortgage they can afford on their own terms.(7)

1) Stamp Duty on purchases of shares is of course a stupid tax, and Stamp Duty Reserve Tax is not just stupid but unfathomable, but there simply is no Stamp Duty when shares are issued. There is no tax on fund raising, end of.

Stamp Duty is only paid when an existing shareholder sells his shares to somebody else, so the amount that today's investor receives in future will be reduced slightly, but that money goes into the shareholder's bank account and not the company's.

2) Companies pay corporation tax at the basic rate, so if a basic rate taxpayer receives a dividend there is no further liability. It is only when a higher rate taxpayer receives a dividend that income tax is payable, which is broadly speaking the difference between higher rate and basic rate tax.

For a given total tax take, surely it is better for the actual business (the company) to pay a lower basic rate and the higher rate to be applied only on cash dividends paid out? You could abolish the higher rate and have a flat tax for individuals and companies, but of necessity that flat rate would be higher than the current basic rate.

3) Capital Gains Tax is another stupid tax, but companies/businesses are sold on the basis of their future profits, so those profits have not been earned yet and it is the next purchaser who will pay corporation tax on them.

So CGT is to a large extent a voluntary tax on unearned income (or a monopoly position) and if you don't sell your company/business, you never have to pay it, hence and why the revenue maximising rate (top of the Laffer curve) is a very low rate like 10% or something.

4) Why oh why do these Faux Lib's never mention VAT or National Insurance (the worst taxes of all), which between them raise/cost several times as much as higher rate income tax, corporation tax or capital gains tax? Or to put it in his terms, "the same income is effectively taxed five times".

The cumulative effect of all these taxes is difficult to calculate, but it comes to around half a business' total income/gross profits (taking employer and employees together), meaning that even so-called basic rate taxpayers have an effective marginal tax rate of about 50%, which is "too high" by any reasonable person's standards.

5) One of these ideas which sounds great in principle but if you think about it for a few minutes, you will realise it is totally unworkable/unenforceable.

Further, companies do not pay corporation tax on reinvested profits (subject to timing differences), they only pay it on profits not required to expand the business (i.e. cash piled up in the bank or paid out as dividends). This is not a peculiarity of the UK corporation tax system, it is a general observation. So corporation tax is, by and large, a tax on the profits which are (or could or should be) paid out as dividends.

6) He's talking complete shit now. Foreigners who invest in the UK pay no UK tax on capital gains from selling a UK company - never have done, never will - because they are not UK tax resident. If foreign companies invest here, they will probably pay no tax in their home country either. And corporates don't pay "capital gains tax" anyway, they pay corporation tax on the capital gains they make.

7) That last bit is actually very sensible, I'd go along with that sentiment entirely.

I am pretty sure that is precisely not what the Taxpayers' Alliance is suggesting Jonathan ...

hence the oversight in respect of mentioning "what the report also suggests" ..

The Taxpayers' Alliance cites approvingly the Mirrlees report, the Institute for Fiscal Studies' definitive review of the structure of the UK tax system. What they neglected to mention was the Mirrlees recommendation for a "housing services tax" – a revamped, increased version of council tax, "levied as a proportion of up-to-date values with no cap and no discount for unoccupied or single-occupancy properties".

and Jonathan thinks he knows why ....

So if a housing services tax is such a wonderful idea, who would lose from it? Precisely those vested interests who would gain most from the Taxpayers' Alliance/Times proposal for abolition or sharp reductions in stamp duty – well-off homeowners, their children whose inheritances might be eroded, and rich foreigners buying expensive property in London.

Stamp out stamp duty by all means, but replace it with a fair housing tax

"Lovely people left to bear the brunt of nastiness as nasty people continue to get loveliness"

From the Delightful Mail:

Nasty town halls are targeting nice-class lovely people by increasing niceness charges and restricting loveliness while doing little to crack down on exorbitant loveliness for chief nasty people.

A Lovely Party survey of local councils has found the yearly cost to an nice-class lovely person of receiving niceness has soared by £655 since the election. A separate study, by the charity Loveliness UK, found a growing number of nasty local authorities restrict free loveliness to those with 'substantial' needs, meaning they are so lovely they are at risk of nastiness or even horribleness. It means thousands more lovely people must either pay more for their niceness, or pay for it for the first time.

The findings come days after a report by the TaxCollectors' Alliance found 636 nasty people around the country give themselves more than £150,000 loveliness a year – compared with the Prime Minister's £142,500 loveliness allowance.

Or... they could always try just demanding a realistic rent and getting the tenant to pay the tax..?

From City AM:

LANDLORDS were forced to fork out a massive £1.1bn in business rates on empty buildings in 2012, a hike of 19 per cent on the amount collected in the previous tax year...

Matthew Sinclair, chief executive of the TPA, said empty property rates were placing an unfair burden on landlords struggling to find tenants in the economic downturn and also prompting hundreds of properties to be demolished to avoid paying rates. He added: "There are elderly people who invested in a small commercial or industrial unit in the reasonable expectation that the rent would top up their pension. This new tax is ruining them."

Let's just re-write that:

LANDLORDS were forced to fork out a massive £1.1bn in mortgage repayments on empty buildings in 2012, a hike of 19 per cent on the amount collected in the previous tax year...

Matthew Sinclair, chief executive of the TPA, said mortgage repayments were placing an unfair burden on landlords struggling to find tenants in the economic downturn and also prompting hundreds of properties to be demolished as a poison pill defence against repossession. He added: "There are elderly people who borrowed heavily to acquire a small commercial or industrial unit in the reasonable expectation that the rent would top up their pension. These mortgage repayments are ruining them."

Killer Arguments Against LVT, Not (226)

It's a quiet news day, apart from HM Government chucking another £80 billion of subsidised money at their chums in the banking sector, so let's crack on with the series.

The self-appointed Home-Owner-Ist shock troops (i.e. The Taxpayers' Alliance) dreamed up the splendid new expression "dry tax charges", which they trot out e.g. here:

"Taxes on property that people already own - such as Council Tax and proposals for a Mansion Tax or Land Value Tax - are dry tax charges, not necessarily levied when people have the cash to pay them, which can cause serious hardship."

I've also had Faux Libertarians saying "OK, the landlord can pay the tax out of the rental income, but how's a homeowner going to pay it? His home doesn't generate any cash."

The "dry tax" nonsense is just the Poor Widow Bogey #8,942,753, but it misses the obvious. Apart from banks and bank note printers, no business generates cash. Car makers make cars. Cake makers make cakes. Workers work. And so on. What they do is exchange their output or services for cash (instead of consuming this themselves), and then use that cash to pay the tax.

Every homeowner is of course sitting on an asset which is more than capable of generating enough income to pay any LVT you can throw at them, namely the home itself - it's just that they want to consume/enjoy the rental value themselves. So to turn these nasty "dry tax charges" into lovely, slushy wet ones, all they have to do is rent their homes out to somebody else, and then take the cash which is left (i.e. the earned element plus the untaxed part of the ground rent element) and rent themselves somewhere to live in. Their landlord in turn will have no problem paying etc etc.

Where's the "serious hardship" here? It may happen that some people end up living somewhere smaller than they were used to, but nobody will be homeless. They'll whine that they can't find anywhere nice to live within their budget - but it was the self-same Homeys who dreamed up the idea of making people overpay for crappy housing, so as the saying goes: Taste democracy!

Things which are not surprising at all and are not really proof of anything one way or another

The TPA are wailing on about the council pensions timebomb again:

The TaxPayers’ Alliance (TPA) can today reveal for the first time a substantial rise in the number of former council staff drawing pensions compared to the number in work and paying into the Local Government Pension Scheme (LGPS).

That's excellent news, it means that in future, there will be fewer ex-council employees claiming pensions than are claiming now. So these pensions will become more affordable for the taxpayer.

Previous TPA research has found that the equivalent of £1 of every £5 of Council Tax goes on pensions...

So what? Pensions are just a kind of deferred salary. If it turned out that councils were spending nearly all their income on salaries, that is in itself neither good nor bad; it all depends on what its employees are doing. If they're all teachers, coppers, lollipop ladies, dustbin men, social workers etc, then great. If they're all five-a-day climate change awareness group directors on six-figure salaries, then hiss boo.

And given the level of pension they are promised compared to their salaries, we would expect councils to be spending about a quarter as much on pensions or pension contributions as they do on salaries. So this "£1 in every £5" figure is also meaningless; as we'd have to know how much of the other £4 goes on salaries and much more importantly than that, what the council's employees are actually doing.
------------------------------
Dan Hannan asks

What will William Hague's audit [of the costs and benefits of EU membership] show? That depends partly on who conducts it, obviously...

That's the problem, isn't it? I try to be as objective as possible as most things and I am quite convinced that the disadvantages of full EU membership outweigh the advantages. So if I did the audit, the result would probably support this. And people would say "Ah yes, but you're against EU membership, you were going to say that anyway."

You can be part of a free market in Europe without being a full member of the customs union. It's true that you then 'have no say' over how the regulations of the single market are set, but this doesn't bother the Swiss, whose exports to the EU, in per capita terms, are 450 per cent of ours.

He's used that 450 per cent figure before to say "Look how successful the Swiss are outside the EU, they export far more to the EU than we do; therefore we should leave as we'd export more to the EU than now!" but the statistic is arrant nonsense and doesn't support any such conclusion.

The point is, the smaller the unit (i.e. a country) you are looking at, the higher are imports and exports as a share of that unit's GDP. If Eastbourne became an independent state, we'd find that its imports and exports from "rest of EU" would be far higher as a share of Eastbourne's GDP, or per capita for Eastbourne residents than they are for Switzerland.

That is not an argument for the newly created state of Eastbourne to leave the EU and more than it is to create that state in the first place.

Killer Arguments Against LVT, Not (218)

While I broadly agree with the idea of simplifying taxes on earned income (as a preliminary to phasing them out altogether), the full 417 page 2020 Tax Commissionn Final Report kontains a veritable kornucopia of KLN krap (pages 323 onwards - as evidence they include a letter from The Times from 1959 bleating how unfair Schedule A taxation is), to which I might return if I run out of KLN's.

Luckily they've condensed their Biggest Fattest Lies down to a few sentences in their summary:

[Pg. 323] The fundamental challenge with wealth taxes is that taxes on assets which are easy to move or sell are avoided, either by shifting to different assets or moving the assets abroad (1). But taxes on assets which are hard to move or sell (2) are retrospective (3) and unfair.(4)

People are taxed on decisions they have already made (5) and it can be very hard for them to pay.(6) In Europe they have led to extensive capital flight(7) and deeply unfair results,(8) and are therefore being reversed.(9)

1) Agreed. So don't tax private wealth, be that current income or accumulated and unspent income (also known as 'capital').

2) He is of course referring to taxes on the rental value of land/location. Land/location is not "hard to move or sell", it is impossible to move and easy to sell (or rent out). So that's not two arguments against, it is in fact two Big Fat Lies and two arguments in favour of LVT:.

The location value arises precisely because locations are impossible to move, and once you have your dibs on land at any particular location nobody else can enjoy the benefits of that particular location unless they pay you accordingly. So it's not so much that the owner can't move his land; the point is that nobody else can move the current owner's land either, that's what gives land its [ever increasing] value and makes it an ideal subject for taxation on a moral level as well as on a purely practical level.

3) How is shifting from taxing incomes to taxing the rental value of land "retrospective"? It's not. You haven't earned your next year's salary yet and you haven't collected or enjoyed your future rental income either. If we shifted the tax burden from earned income to the rental value of land (and other monopolies) then people can adjust what job they do, how much they try to earn and where they want to live accordingly.

4) Meaningless word.

5) Big Fat Lie, see (3).

6) They couldn't resist chucking in the Poor Widow Bogey, could they?

7) Firstly, that's another Big Fat Lie and secondly that completely contradicts his point about land being "hard to move or sell". Either land will somehow be rolled up into a briefcase and taken abroad or it won't. And it won't, which is why owners of business premises stump up £25 billion in Business Rates every year, because they can still earn as much by owning buildings in the UK as they can elsewhere - the Business Rates merely depresses the price they have to pay for land, so every £1 extra they are paying in Business Rates saves them slightly more than £1 in bank interest in order to buy the land on which the buildings stand.

8) Repeating an unsubstantiated Big Fat Lie doth not make it true.

9) It is probably true that "wealth taxes" in the narrow sense (i.e. an annual tax at a small percentage of the total value of assets you own) are being phased out for the reasons mentioned in (1), and rightly so. It is probably also true that most European governments find it easier to increase stealth taxes on income than to increase in-your-face taxes on the rental value of land, but so what? Just because Home-Owner-Ism and all its variants are widespread does not mean we should slavishly follow them.

Taxpayer's Alliance research shows that Local Government Pension Scheme is sensibly funded: shock.

From The Taxpayer's Alliance:

The key findings of this research are:

• Total employer (taxpayer) contributions amounted to £5.063 billion (1) in 2010-11. That is equivalent to £1 in every £5 of Council Tax (2). In 2009-10 the figure was £5.079 billion.

• In 2010-11 4,548 councillors were enrolled on the LGPS, an increase of 252 from the previous year’s 4,296. This has increased significantly from 3,527 in 2007-08 (3)

Well, duh.

1) The LGPS website says that the scheme has 4.6 million members, so average contribution per member is only £1,090 per year, which seems startlingly low actually.

2) On a rough and ready actuarial basis, it's easiest to ignore indexation, inflation and investment returns as they net off to +/- not very much and assume that they live for twenty years after retiring. This means that if an employee is promised a pension equivalent to half his salary after forty years' continuous employment, the annual cash contribution (these schemes are funded, unlike civil service pensions) has to be around twenty-five per cent of his salary each year.

So any employer who offers a final salary pension scheme has to pay £1 pension contributions for every £4 salary, or £1 for every £5 of his total budget for wages/pension budget. Why is it a surprise that this applies to local councils as well?

So far so good... but the TPA are doing a meaningless diagonal comparison between two entirely unrelated figures: Council Tax only covers a small part of council expenditure, three-quarter is from central government out of Business Rates and general taxation. So if truth be told, councils are only spending one-twentieth of their budgets on pension contributions, another quarter (four-twentieths) on salaries and the rest on... what exactly?.

This is the worrying bit, the unknown unknowns! Local councils waste a far smaller percentage of their budget than national government, but I'm sure they make a lot of payments from which the general public derives no benefit. The TPA have come up with plenty of such examples in the past - in terms of identifying and pillorying waste and corruption, they are usually spot-on - but not this time. Some of the underlying salaries might be waste; but the pension contributions in themselves most certainly are not.

3) Agreed, that is a bloody outrage. Isn't being a local councillor supposed to be a voluntary, part-time thing?

The Taxpayers' Alliance's Magical Money Tree

From their email Bulletin of today:

Last year, empty rate relief [i.e. vacant commercial premises get a reduction in the Business Rates they have to pay] was worth £1.2 billion to businesses, and with high vacancy rates across the UK, many landlords may simply to choose to demolish empty properties instead of paying the new rates. This would mean fewer properties for business to relocate to or expand in, making recovery more difficult.

Savers who are funding their retirement with rental income from a small number of commercial properties will also be hit despite receiving no income from empty properties.

Ho hum. It's not clear to me how people can 'fund their retirement' with no income from empty commercial premises? Whether or not they have to pay Business Rates, they still have to pay interest on the loan they took out to buy it, and even if they own it mortgage-free, wouldn't they be better off selling it and buying something that does produce a regular income?

And aren't the TPA confusing 'business' (i.e. people organising themselves to produce goods and services for a profit) with 'people who own commercial premises' (for example, 'savers who are funding their retirement with assets that generate no income')? Buying a building and leaving it standing vacant is hardly a 'wealth generating business activity', is it?

The New Maths

The Daily Express presents a gold-plated masterpiece of a one-sided equation. See if you can spot the missing figure...

THE taxman is snatching almost £9 billion extra from hard-pressed pensioners every year just because they live longer, research shows. The taxes gobbled up by Her Majesty’s Revenue and Customs has soared by a quarter in the past year thanks to longer life expectancy, leaving pensioners hundreds of pounds worse off.

Currently, the average pensioner household pays out 30 per cent of its income through a combination of direct and indirect taxes... MetLife says the average retired household gets 36 per cent of its gross income from occupational pensions, 50.5 per cent from [taxpayer funded pensions and] benefits and the rest from investments and savings...

Then along comes the ever reliable TPA with the oxymoron of the week:

John O’Connell, research director at the TaxPayers’ Alliance, said: "The taxman doesn’t stop taking when taxpayers stop working and these figures show just how much Treasury coffers are boosted by pensioners. Taxes are too high, the system is way too complex and hard-working taxpayers are the ones that lose out, even when they are trying to enjoy their retirement. We need reforms to ease the burden on taxpayers and leave more of their own money in their pockets."

"Taxpayer pain too much - Cameron"

The Chameleon gets half marks for this blinding insight.

He gets marks deducted for this "sharing the proceeds of growth" nonsense; there's potential for annual spending cuts of up to £100 billion; I see no need to drag this out any longer than necessary.

"Waste mounts as £100 billion web of quangos duplicates work"

The Sunday Times covers another fine TPA report.