Hey! I thought it was Labour's turn this week to come up with crackpot policy proposals!!

Spotted by Bob E in The Telegraph:

Buyers of gas-guzzling sportscars and other large-engine vehicles would face a new purchase tax (1) of up to £23,000 under plans drawn up by a government adviser and backed by a Cabinet minister.

Even the price of some small cars would rise by more than £1,500 in exchange for the abolition of annual Vehicle Excise Duty payments. However, buyers of new small efficient cars would get a government subsidy of up to £750 (2), under the proposed rules, which are being promoted by the Liberal Democrats. The proposals for vehicle taxation come as the Treasury considers the best way to reform or replace VED to respond to the increasing fuel efficiency of modern cars (3).

The plan is put forward today in a think-tank paper written by Tim Leunig, who has recently been appointed a special adviser to the Government. Mr Leunig’s paper for the Centre Forum think-tank – written before his appointment -- has been backed by Ed Davey, the Energy Secretary...

Mr Leunig said: "More efficient cars save motorists money and reduce global warming. What's not to like?"(4)

1) We already have a "purchase tax" on new cars, it's called "VAT". And a very bad tax it is too.

2) Brilliant. A "purchase tax" and a subsidy, all in one go, maybe we could just net off the two to a smaller tax amount?

3) We already have a splendid tax on the amount of fuel you use/amount of road space you use (two birds, one stone), it's called Fuel Duty.

4) Coming up with shit ideas and then using one of my favourite sign-offs, which I in turn adopted from The Remittance Man.

Like a Universal Inheritance... for existing homeowners.

Tim Leunig gives his idea about auctioning off planning permission another outing in the Local Government Chronicle.

As part of the growth review, the government is considering “Community Land Auctions”, based on my CentreForum pamphlet “In my back yard”. Under this approach, local councils capture the rise in value when they rezone agricultural or industrial land for housing, creating a big incentive to support development.

It works like this... Having decided which land can be developed, the council [buys it off farmers for slightly above its agricultural value and] auctions it to developers, keeping the difference between the price named by the original landowner, and that paid by the developer. There is no risk to the council - if no developer wants the land, there is no sale and the original landowner retains the land.

A typical 57 hectare farm in the south east - where housing is most needed - is worth around £1m as a farm, and over £100m for housing (even more in housing hotspots). Most farmers will sell their farm for five times fair value, and many for double fair value, which is, after all, a £1m windfall. (I will sell my house for £1m more than it is worth, if any reader wants to buy it!). The council therefore makes at least £95m per farm, which comes to at least £50,000 per house. That is far greater than the incentives currently proposed.

If Horsham DC allowed housing on one average size farm, they could halve council tax for four years. That, surely, is a winning electoral prospect. More radically, were Cambridge to allow a million new houses near the city - like America’s Silicon Valley - it could give current adult residents around £700,000 each. Again, that should be a vote winner.

Ho hum. This plan to 'halve council tax for four years' sounds like windfall gains for existing homeowners. Why not tweak the plan to make it more like a proper Universal Inheritance thusly:

1. Councils buy the land and auction it off, making a cash profit (same as under his plan).

2. Councils can keep (say) a fifth of the cash profit for placating local NIMBYs, and the other four-fifths is pooled nationally.

3. The amount pooled nationally is then divided up between all UK-resident British Citizens who get married each year (or all UK-resident British Citizens who reach the age of 25, or whatever) and handed out in cash, earmarked for the cost of their first home.

4. The amount each new couple receive would be about £50,000 (using his figures), which they can use to buy an ex-council flat Up North, or as a 25% deposit for a semi-detached in most of England or a ten per cent deposits on a rather nice new 'executive villa' near Cambridge, that's entirely up to them.

Let the market decide!

Beautiful article by Prof. Tim Leunig in today's FT, saying that the government should stop micro-managing and leave it up to the markets.

"Hurrah!", shout the Tories.

"Boo!", shout the socialists.

Well, in this case, probably not...

... because the article is referring to the housing market, saying that homes should be built where land prices are highest, i.e. round London, Oxford and Cambridge. And these are Tory NIMBY heartlands. I can already hear them muttering about "concreting over the South East", "unsustainable development", "overburdened infrastructure", "mass immigration" and "the UK is much more densely populated than France or Germany"* and so on.

So funnily enough, as shit as Labour's planning interventions have been and always will be, I think it's one-nil to the socialists this time.

* It was never clear to me what the population densities of France and Germany have got to do with sensible housing policy in the UK, but the NIMBYs keep trotting it out.