"Clegg and Cable pub visit show of unity"

From the BBC:

Lib Dem leader Nick Clegg and Vince Cable have put on a show of unity with a visit to a London pub.

The event, to highlight the fact that Vince is Nick's best mate and he loves him like a brother, came after Mr Cable was forced to deny fancying Mrs Clegg.

The younger of the two men caused confusion behind the bar by asking for a glass of the house white before sitting at a table in the pub, watched through the windows by bored commuters at a bus stop. The older man settled for a cup of tea with milk, noting that bitter "went straight through him".

As they left Mr Cable said they had talked about going on to a club, but Mr Clegg said they had had a "very nice drink and it was time he got back home to the wife and kids".

The rare joint appearance by the two men began with Mr Clegg taking on the wingman duties, trying to pull a barmaid while Mr Cable eyed up her better looking colleague.

"Ukraine vote plan blights Crimean business investment, says Cable"

From the BBC:

Oleksandr Turchynov's commitment to an in/out referendum on continuing membership of the Russian Federation is "blighting" investment in Ukraine, Russian President Vladimir Putin will warn later.

The former KGB official will say firms will "look elsewhere" to invest if access to the Russian market is jeopardised…

Mr Turchynov says a full renegotiation of the relationship between Ukraine and Moscow is needed and voters need a say on the issue of membership of the Russian Federation.

In other news:

Crimean MPs' commitment to an in/out referendum on continued membership of Ukraine is "blighting" investment in the region, acting Ukraine President Oleksandr Turchynov will warn later.

The politician will say firms will "look elsewhere" to invest if access to the Ukraine market is jeopardised…

Crimean MPs say a full renegotiation of the relationship between Crimea and Kiev is needed and voters need a say on the issue of membership of the Ukraine.

"Clegg and Alexander reject Cable's warning over Help to Buy"

From The Guardian:

Nick Clegg and Danny Alexander have dismissed a call by their Liberal Democrat colleague Vince Cable to restrict the second phase of the government's Help to Buy mortgage scheme to areas of the country with depressed property prices.

In a sign of tensions over the economic policy at senior levels of the party, Clegg and his close ally Alexander rejected Cable's warnings that Britain was facing a dangerous housing bubble.

Does not compute.

The justification for Help To Buy was that houses are too expensive and so first time buyers have to be "helped". The very existence of the scheme is the government's tacit admission that house prices are in a bubble.

If prices were "affordable" by whatever measure, then there'd be no need for such schemes. So Cable's idea about restricting it to "areas of the country with depressed property prices" is even more stupid than Clegg and Alexander's state of denial - because people don't need help to buy a cheap house.

The only way that any of this makes sense is if "Help To Buy" is in fact "Help To Sell", then it makes perfect sense from the point of view of a Home-Owner-Ist government trying to win a general election from a majority Home-Owner-Ist electorate.

H/t Alan at HPC.

Fun Online Polls: The fall in crime & Help To Sell Buy

The results to last week's Fun Online Poll were as follows:

Which of the following reasons do you think explain the fall in crime over the last twenty years? Multiple selections allowed.

Better locks and alarms on cars, kill switch on mobile phones - 49 votes
Consumer goods have become cheaper - 38 votes
Doubling of prison population - 33 votes
Computer games and online porn - 29 vote
Reversion to the mean - the 1970s and 1980s were a blip - 21 votes
Banning lead in petrol - 21 votes
Legalisation of abortion - 20 votes
More CCTV - 15 votes
Falling alcohol and drug consumption - 12 votes
Oestrogen in tap water - 7 votes
Better policing - 5 votes
Spread of civilisation - 0 votes
Other - please specify - 26 votes

I'd like to thank everybody who took the time and trouble to read through the list and choose the most likely explanations, an average of two or three each. No explanation scored a convincing majority, but the first three do look very plausible.

Twenty-six people chose "Other - please specify", but only half a dozen bothered to specify, which was mainly that the statistics are fudged; that crimes are being reclassified as non-crimes; or that people just don't bother reporting crimes any more. That may be so, but if it's that easy, why didn't The Powers That Be think of this during the 1970s and 1980s when crime rate were - officially - rising rapidly? And why have falling crime rates been noticed in most countries over the past twenty years, it is a worldwide, long term trend (which hopefully will not end any time soon)?

It's a fascinating topic but the truth is, nobody really knows what the truth is.
--------------------------------------------
This week, let's do Help To Sell Buy.

Vince Cable came out fighting yesterday (via JackC at JPC):

A flagship government scheme to revive the housing market could inflate it, Business Secretary Vince Cable warns...

The Help to Buy scheme provides equity loans of up to 20% for buyers of new-build homes in England and will start part-guaranteeing mortgages for buyers across the UK from next year.

"I am worried of the danger of getting into another housing bubble," Mr Cable told the BBC's Andrew Marr Show...

Be that as it may, you can record your approval or disapproval here or use the widget in the sidebar.

The rapidly shrinking middle class

From The Telegraph:

[The Lib Dems] suggest a one per cent tax on properties over the value of £2 million, which would be paid by the wealthiest 0.16 per cent of property owners.

However, the Chancellor has explicitly ruled out this possibility, saying many middle-class people could find themselves suddenly paying higher taxes.

Somehow I prefer the American meaning of "middle class" which is just about any family with at least one earner and probably most pensioners. I fail to see how you can equate "the wealthiest 0.16 per cent" with "many middle-class people" or vice versa.

Fun Online Polls: E-Bacc & Crackpot Lib-Dem ideas

The results to last week's meaningless rebranding exercise were as follows:

CSE's - 11 votes
GCE's - 10 votes
GCSE's - 12 votes
English Baccalaureate - 21 votes
School leaving age - 14 votes
Participation age - 13 votes
Other such gibberish - 27 votes

Only 47 people took part and no doubt none of us is any the wiser for it.
---------------------------------------------------------
This week it's the Lib Dems' turn, after three days of conference, we've seen plenty of daft ideas. Which is your favourite so far?

Vote here or use the widget in the sidebar.

Vince's crackpot idea of the day

From The Guardian:

George Osborne has agreed to set aside £1bn to establish a British business bank to help small- and medium-sized enterprises, Vince Cable will announce on Monday.

In what Liberal Democrats are hailing as one of the major announcements of their conference, the business secretary will say that the new bank could leverage up to £10bn to help businesses struggling to find funds from high-street banks.

Just like with Nick Clegg's "give your children your pension to help them onto the property ladder" idea, words fail.

FFS, the sub-plot of the most recent episode of The Thick Of It was that two ministers set up exactly such a small business bank, but that was supposed to be satire.

Cable to force three year binding votes on MP's pay

From the BBC

Business Secretary Vince Cable will announce plans on Wednesday to force parliament to have binding votes on MPs pay every three years. Parliament will then have to stick to their pay plans for the next three years or have another popular vote.

They will also have to publish a simple figure every year showing how much MPs have been paid. And they will have to say how much pension an MP will be paid if they are sacked or quit.

Currently, MPs vote for their own pay, typically soon after getting elected, so they get a better salary, and because they're in for 4 or 5 years, there's nothing the people can do about it.

Uncle Vince

Killer Arguments Against LVT, Not (191)

So far, the Home-Owner-Ist élite (the bankers and large landlords) have kept above the fray and relied on the fact that their foot soldiers (from owner-occupiers to journalists with BTL portfolios to Faux Lib's) will do the campaigning for them, but now the gloves are off. The paid-for editorial in yesterday's CityAM was a long rant against the Lib Dem's idea that we could/should scrap the 50p top income tax rate and have a Mansion Tax instead.

His argument seems to be that our entire economy depends on a few foreign money launderers and tax evaders who will pay insane prices for housing in a very small part of London. In his view, they don't care about investing in UK productive businesses (so there is no advantage in reducing income tax rates, that's for us grateful plebs to pay); they don't trust our banks enough to just deposit money with them as a safe haven; and he falls for the fiction that not having land value tax makes it cheaper for them to buy land and buildings (it doesn't - in the long run it makes it more risky and more expensive):

A key reason the UK, for all its unattractive characteristics, remains a safe haven of sorts for global investors, is its history of legal stability. Foreigners know the UK takes property rights seriously and that their wealth will be protected – that is why they spend so much here and why Greeks fleeing crumbling banks are converting euros into London homes.

This is great for our current account deficit, means we remain at the heart of capital flows and that the world’s entrepreneurs and financiers will look at the UK kindly when they decide where to create jobs. It helps preserve London’s role as a global city.

Right. So if we reduced taxes on income, all those foreign money launderers and tax evaders wouldn't see the UK as an excellent place for inward investment into productive businesses? I don't see why the average Brit should be called on to pay extra taxes on their hard earned just to subsidise 'wealth protection' for these people anyway, bearing in mind that lower taxes on land push up the purchase price of land, thereby increasing the likelihood that owners of land will suffer nasty capital losses, which is hardly 'wealth protection', is it?

The rest of the article is a long list of KLNs, all of which I have rebutted before...
- LVT is neither a jealousy surcharge nor a tax on 'wealth' in any sense of the word, it is a user charge.
- Replacing income tax with LVT is not a 'war on the rich' (many truly rich people, i.e. high earners, would end up much better off).
- LVT is the thin end of the wedge, but that wedge was a lot thicker decades or centuries ago. Historically, taxes on land values were the main source of UK government revenue before they starting introducing all these stealth taxes like income tax (and all its variants). It's these stealth taxes on income which are the ever thicker end of the wrong wedge.
- Because LVT has no Laffer effects, a tax shift would make us all better off in the long run (apart from the current Home-Owner-Ist élite, of course).
- LVT is not an attack on 'private property', income tax is.
- He plays the Poor Widow Bogey twice.
- He claims that wealthy people will all move abroad (nonsense).
- He points out what he sees as "crippling practical flaws" which are no such thing if we apply commonsense.
- A tax on land is a tax on land. It is not, and will never be, a tax on pension fund assets; we already have those - everybody who doesn't save into an approved pension is paying the largest part of £44 billion's worth of tax breaks/subsidies for those who do and there's a privately collected tax of between £40 and £60 billion a year on pension assets (being the fees and commissions earned by the pensions companies).
- He ends the article by citing some mythical past which, on the facts, did not exist (see above).

Myth Of The Week: Banks lend to (small) businesses

Uncle Vince has proposed doing something or other which is not popular with the banks, so the banks have promptly hit back with the usual crapola, for example:

Stuart Fraser, a former stockbroker and head of the City of London Corporation, said: "It is vital we reconcile political imperatives with what is practical for banks. There is only a finite amount of capital available (1), and if banks have to stump up more, they shouldn't be rushed."...

CBI chief John Cridland said on Tuesday: "Taking action at this moment, which weakens the ability of banks to provide the finance businesses need to grow, (2) is barking mad."...

But Cable was taken to task by financial services lobby group TheCityUK, which said: "A rush to implementation risks weakening the UK's economic recovery if it weakens the lending capacity needed in the market."

1) He's an idiot. Loans create deposits and not the other way round. if people want to borrow and look like a good risk, the bank just lends them the money, they spend it on something else and the recipient of the funds deposits them back in the banking system.

2) Taking RBS' financial statements as an example, their balance sheet shows total loans and advances to customers of £555 billion, of which £115 billion is loans to 'corporates'. Let's times those figures by four as a reasonable estimate of the overall UK picture, gives us total lending to businesses of £460 billion.

Out of that £460 billion, just under £300 billion is secured on commercial land and buildings (so it's not really lending to businesses at all, it's lending to owners of commercial land and buildings) which leaves us £160 billion, some of which may well be nominally to 'small businesses' but experience tells us that the bulk of this is secured on the homes belonging to directors or shareholders, so that's not really lending to small business either, that's a second mortgage which the borrower invests in his business.

We could continue slicing away like this, but what it boils down to is that only a few per cent of total bank lending is really lending to small businesses. To be fair, why should they - It's complicated and risky - but that's another topic.
------------------------
UPDATE: I spotted this in the Evening Standard on the way home:

"The Federation of Small Businesses also demanded that reform be implemented soon, dismissing fears that ring-fencing retail banks from their riskier investment arms will hit profits and force them to cut lending.

Andrew Cave, FSB director of external affairs, said: "Since 2008, we've been dealing with the consequences of doing nothing. It's extraordinary that it has been suggested that these important and timely reforms are being put back even further. We think ring-fencing the banks is essential not only to make it safer but also to create a behavioural shift - so that the banks change their behaviour to small businesses. Only 5% of lending is to corporates."

Killer Arguments Against LVT, Not (154)

From today's FT:

“If we do get rid of the 50p [income tax] rate we need to make sure there is something else levied on higher rate payers. Lib Dems think there should be a new way of taxing wealth,” one senior Lib Dem aide said. Talk of lowering the top rate of tax has triggered a dispute within the coalition, with Danny Alexander, the chief secretary to the Treasury, saying advocates of the move were “living in cloud cuckoo land”. (1)

But the Lib Dems expect it will happen, and are concentrating on coming up with replacement taxes that would raise extra revenue and win the support of voters, among whom the 50p rate is popular.(2) Mr Cable has long favoured the option of a “mansion tax”, levied on the sale of high-value homes, although others inside and outside the party have called it overly-complicated and unworkable...(3)

David Laws, the former chief secretary to the Treasury, and one of Mr Clegg’s closest political allies, is opposed to all these forms of wealth tax (4), saying they amount to double taxation after income tax has already been raised. (5)

1) Why? We managed perfectly well with a top income tax rate of 40p until a year ago, and according to HMRC estimates, it only raises about £1 billion. According to others, the top rate of 50p is past the top of the Laffer Curve and reduces overall revenues.

2) Have we really sunk this low? The 50p top tax rate on wealth creation is 'popular' but such is our reverence for 'people in big houses' that a tax on rent seeking and unearned wealth wouldn't be?

3) No it wouldn't be, not compared to the hyper-complexity of the current tax system, or the complexity of the 50p top tax rate alone (which requires a whole raft of anti-avoidance provisions to make it anywhere near enforceable), if anything it would be as simple as, or simpler than Business Rates in the UK or Domestic Rates in Northern Ireland. And given that any tax on residential land and buildings could and should replace other taxes, it would lead to a massive reduction in the overall complexity and unworkability of the tax system - the more taxes you replace, the easier it gets (including politically easier, as there'll be a minimum of people who'd lose out on Day One).

I sketched out a possible system for taxing residential land and buildings which ended up being published on Labour Left (of all places). If you want to get rid of the 50p top tax rate as well, or even the £30,000 non-dom levy, you just have to increase the target receipts from £42.5 billion per annum to £43.5 billion, hooray, yet more fiddly little taxes and jealousy surcharges out of the window.

4) A tax on the rental value of land is not a tax on wealth, it's a user charge. In the same way as a tax on petrol is not a tax on the wealth tied up in your car (VAT is), it's a tax on road use.

5) So if you pay 50% income tax, that's OK, but if you were to pay 40% income tax and approx. 5% of your income in LVT, that's double taxation, is it? Since when does "paying less tax" amount to double taxation?

Wince

Reading The Entrails

In his Budget speech, little George Osborne muttered something about 'making owners of high value properties pay their fair share of taxes' (why he refers to 'residential land and buildings' as 'property' is a mystery to me).

At a mundane level, what I think he means is doing something about Stamp Duty Land Tax avoidance schemes using limited companies, or possibly he was referring to the fact he's increased the annual non-dom levy from £30,000 to £50,000* for people who have been here for more than twelve years.

On a more optimistic level, perhaps Uncle Vince is right (and he ought to know, seeing as he can just ask at the next Cabinet meeting) and little George is thinking about something like a Mansion Tax.

* What is entirely bizarre is that people in this country have no respect for real wealth, it is only 'land ownership' (which is not real wealth at all) which confers some sort of exalted status. Don't forget that the non-dom levy was originally a Tory idea a few years ago, which Labour enacted. I don't see the Faux Libertarians out on the streets comparing this to the Window Tax.

So if wealthy non-dom's are asked to pay £30,000 or £50,000 a year EACH for the privilege of living in the UK, that's fair game. But if instead they were asked to pay 0.5% of the value of their homes above a very high threshold of £1m or £2m (i.e. a levy for the privilege of living in a certain part of London or Poole, Dorset) that would be seen as an attack on 'wealth' or something.

PS, the number and type of people paying the non-dom levy and the amount of money it raises would be broadly similar to the amount raised from the Mansion Tax.

THE COALITION AND ITS SUPPORT FOR THE PRIVATE SECTOR

I am not Mark Wadsworth

One of the unheralded successes of the British financial services sector is company incorporation. For around £30 online you can have a fully functional private limited company incorporated and ready to trade in 24 hours. Compare this with our "partners" in the EU. In Spain, for instance, the cost of an equivalent company to the punter is about 100 (yes one hundred) times that. Moreover, there's endless delay together with a Grand National's worth of bureaucratic hurdles to jump over.

Unfortunately, the coalition is unhappy to see this tiny piece of excellence and efficiency continue. The Registrar of Companies proposes, on the basis of what appears to be the wilful misreading of two EU directives - 2003/58 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:221:0013:0016:EN:PDF and 2006/123 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:376:0036:0068:en:PDF , to set up in competition. The new service, to be called the "Citizens Incorporation Service", will be provided in concert with another taxpayer funded organisation (Business Links) and in competition with the existing (private) providers. The cost of incorporation through the new service will be £18.

On a reading of the Directives it's clear that 1. they were not issued to give Companies House and another taxpayer-funded entity an effective monopoly on company incorporation in the UK and 2. the existing Companies House regime already complies with the directives. I write "effective monopoly" because the £18 proposed fee is equivalent to the cost price of the service to company formation agents. This basic cost to the CFA does not include any return on the extensive software investment necessary to the CFA to effect an incorporation.

Worse, the basic cost doesn't include the cost to CFAs of applying, at considerable expense, the money laundering and "know your client" regulations. These regulations, by the way, will not apparently apply to incorporations through the Citizens Incorporation Service. I know those regulations are a farce (the equivalent of the "security theatre" mounted daily at airports world-wide) but, even so, you would expect the producers of the farce to ensure that their own bureaucrats at least went through the motions.

I should add that a similar proposed scheme was turned down by the previous (Labour) government partly because of the significant damage it would do to existing CFAs. This doesn't seem to worry the Minister for Business - Mark Prisk (a "Conservative") - or his boss Vince Cable.

On a personal note I should add that part of my services to clients includes arranging incorporations. I use a very efficient and reasonably priced CFA who I intend to keep using.

Umbongo

Epic Logic Fail

From Property Week:

Neill drops £400m empty rates bombshell on small businesses. Empty rates relief for small properties has been scrapped in a move likely to cost businesses £400m a year.

Vacant properties with a rateable value of less than £18,000 a year had previously been exempt from paying business rates. But communities minister Bob Neill yesterday announced that the threshold would drop to £2,600 from 1 April, estimating that to continue with the exemption would cost government £400m a year...

Liz Peace, chief executive at the British Property Federation, said: "If the government is pinning its hopes on a private sector led economic recovery then this is a damaging and retrograde step. Empty rates is a tax on hardship at the worst possible time. The majority of the properties affected by this announcement will be in areas that are already economically disadvantaged, and so this will be a further blow."

Yesterday’s announcement came despite heavy criticism of the tax from The Morbidly Obese One and business secretary Vince Cable while in opposition.

WTF?

It strikes me that 'vacant premises' and 'somewhere where economic activity is taking place' are two mutually exclusive states. A tax on one is, by definition, not a tax or a burden on the other.

Even if they doubled Business Rates on vacant premises (so they were taxed at a punitive rate rather than being exempt), it would not affect active businesses (you know, those entrepreneurs who are trying to build up something; those people who want to go out and work, all the stuff that'll help get us out of the recession) one iota, and if anything, it would stimulate economic activity, because those vacant premises would be renovated in a twinkling and the landlord would make damn' sure that he got tenants in pronto.

And yes, I've heard all these tales about 'landlords tearing the roof off' which is why a tax on the site value alone would be even better than Business Rates without exemptions, that's just details. And Vince Cable, who has often held himself out as a moderate Land Value Taxer really ought to know better.

Channel 4: Britain's Trillion Pound Horror Story

Last night's TV programme was a very good introduction to how the whole system 'works' (or not, as the case may be), but it did gloss over certain issues and was in some cases deliberately misleading. Bellwether trotted out a few of the main claims made in the programme over at HPC, I responded as follows (BW's claims in italics):
------------------------------
"There are, we were told 7.5 million public sector workers, of which the poster children for the state, eg nurses, police etc, the front line services, make up only 2 million."

Correct, I have been saying this for ages. They missed off 'social workers' (sort of middle ground between teachers, police, prison officers, probation officers and district nurses) which are about 300,000 but they admit they included teachers, nurses, doctors in the private sector, so that all evens out nicely.

"The public sector is bigger than the private sector."

Now that is simply not true, and an exaggeration at best. It is perfectly easy to imagine a teeny tiny state, with only 1 million coppers, prison officers, firemen etc, but which raises 50% of GDP in taxation (preferably LVT but flat rate 50% income tax will do) and which pays this out as a Citizen's Income of about £10,000 per person per year (or less for kids, more for pensioners) and everybody just pays for his own health care or his children's education out of that.

A far more relevant statistic is not just the 7 or 8 million directly taxpayer funded jobs, but the fact that the state spends nearly twice as much on 'procurement' from the private sector as it does on public sector wages and pensions. Yup, one fifth of GDP goes in juicy contracts to party donors, brothers in law of councillors etc.

"benefits last year were in excess of income tax."

Quite true, but misleading. Income tax in the narrow sense is only about ten per cent of GDP, "welfare" is about five per cent and old age pensions six per cent. The other taxes on income (national insurance, corporation tax, value added tax) add up to nearly twice as much again as income tax.
------------------------------
I suppose the most outrageous claim was that the British taxpayer is on the hook for debts of £4.8 trillion. Official public sector accumulated debt is about £1 trillion and the net present value of accrued public sector pension rights is another £1 trillion, plus minus bits and pieces like PFI, but it is no more than that.

It is a wild exaggeration to include the net present value of e.g. future old age pensions, because we have a pay-as-you-go system. Each taxpayer has to stump up a share of current pensions, so you could say that each taxpayer is committed to paying liabilities with a negative net present value of £X0,000, but most taxpayers will live long enough to receive twenty years' worth of old age pensions themselves, which is a positive net present value of £Y0,000. The fact that for many people X > Y (it certainly is in my case) is a separate issue.

And further, Allister Heath trotted out the mantra that 'if you tax something you get less of it', which is quite true for the productive economy (if you have payroll taxes, you get lower employment), but completely not true for taxes on the rental value of land. However, the minute the subject turns to taxes on land and buildings, Mr Heath throws his economist's hat in the corner in a foot-stamping frenzy and he turns into a tired old politician:

... that didn’t stop Darling from launching yet another raid on the better-off, with his new 5 per cent stamp duty on homes worth £1m or above. There was time when aspiration was rewarded in Britain; this is no longer true... At least the stamp duty hike is not as damaging as Vince Cable’s mansion tax, a purer and more devastating form of wealth tax.

Pray tell, which 'wealth' would be 'devastated' if we had a Mansion Tax, as poorly thought through as it was? Would the rental value of the affected villas or penthouses fall by one penny? Nope. Would millionaires take their land and buildings abroad? Nope. At worst, it's a 20% tax on the actual or notional rental income, which would bring the average tax rate on such largely unearned income closer to the punitive rates on most of the productive economy. Either we're in favour of flat taxes or we're not, eh?

They also majored on how Hong Kong's economy had grown exponentially since it adopted a flat income tax of 15% back in the 1960s (hooray) but didn't mention that half of Hong Kong government revenues come from granting leases of land (which is a very crude form of Land Value Tax, of course).

Lying Home-Owner-Ist Shit Of The Day

From The Daily Mail:

What Vince said... and his real message

By Edward Heathcoat Amory

What he said: '(I want) to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth. I personally regret that Mansion Tax did not make it into the Coalition Agreement.'

What he meant: When I proposed the deeply unpopular Mansion Tax plan (which would hurt pensioners more than City speculators) before the election, I was forced to water it down. Now I can mention it without getting into trouble, because everyone knows that the Tories would never let me do it.

Vince is a politician like any other. Why would he deliberately propose something that would be 'unpopular'? It was Home-Owner-Ist propaganda like this that made it unpopular, not the underlying logic.

And why would it "hurt" pensioners? Commonsense tells us that if we are to replace income tax, VAT with Land Value Tax or a Progressive Property Tax, we'd have to exempt pensioners (or give them massive discounts or deferment or something or other) to have the faintest hope of making it stick. But City speculators, the whipping boys du jour, would lose out three fold:

1. They probably live in million pound houses. And I suspect that there are a lot more City speculators (and Russian oligarchs, Arab oil barons, Chinese Party functionaries etc) in million pound houses in the UK than there are pensioners.

2. They make money from lending other people money to buy million pound houses. Or they are estate agents who make money by selling people million pound houses.

3. They can't avoid the tax in any meaningful way.

What's not to like?

As an aside, if these 'City speculators' are thinking of buggering off to Switzerland, don't forget that Switzerland also has a number of different property taxes, which amount to something vaguely similar to Vince's proposed Mansion Tax. It's the stupid 50% super tax that's the killer (which raises £3 billion a year, allegedly) and swapping this for a Mansion Tax (which Vince expected would raise a paltry £1 billion or something) seems like a no-brainer to me.

"Vince Cable turns his guns on home owners"

The Daily Telegraph actually picked up on that bit of Vince's speech and has done a Daily Mail-style counter attack (i.e. misinterpret what he said, and then attack that):

Middle-class home owners would pay higher taxes under radical plans outlined by Vince Cable, the Liberal Democrat Business Secretary.

In a speech at his party's annual conference, Mr Cable called for the "tax base" to be shifted on to "property and land". He said it was far harder for people to dodge property taxes than income tax. The wealthy increasingly are moving their affairs offshore to avoid the new 50p rate on earnings.

Mr Cable expressed concern over the "extreme concentration of wealth" among those who own property. His comments will alarm middle-class home owners who have seen council tax bills double over the past decade.

George Osborne, the Chancellor, is likely to reject plans for higher property taxes and the Conservatives are already attempting to cap council tax bills. The speech is likely to add to the growing friction between the Business Secretary and Mr Osborne.

Oh dear.

When Vince referred to "extreme concentration of wealth" he did not mean "middle-class home owners", no sir. He meant people like the Duke of Westminster. And you'll note that Vince didn't ask for "taxes to be increased" he asked for "the tax base to be shifted".

I don't know what sort of topsy turvy Home-Owner-Ist world the Daily Telegraph live in, but I'd assume that "middle-class home owners" and "the wealthy [who] are moving their affairs offshore to avoid the new 50p rate on earnings" are mutually exclusive.

Vince probably supports the 50p rate, but apart from that he and the DT are agreed on this point: the super-tax has led to evasion/avoidance therefore the super-tax has the effect of increasing the tax burden on everybody else (Laffer Curve and all that).

So all thing being equal, if you were a "middle-class home owner", you'd prefer Vince's Mansion Tax (which somebody else pays) to the 50p super-tax (which indirectly increases the taxes on you).

Spotted by DBC Reed

Buried away in Uncle Vince's speech between the fudge, soundbites and dogwhistling was this:

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right.

But a progressive alternative is to shift the tax base to property and land which cannot run away and represent, in Britain, an extreme concentration of wealth. I personally regret that mansion tax did not make it into the Coalition Agreement but in a coalition we have to compromise. But we can and should maintain our distinctive and progressive tax policies for the future.