I was surprised to see this in The Telegraph

I just stumbled across this, from three years ago:

Business rates are the closest thing we have in the UK to a land value tax (LVT). They're favoured by economists for their property of being "non-distortionary". They don't mess around with incentives, unlike many other forms of taxation.

A higher income tax may be a deterrent to earning more money in the UK, as are corporation tax hikes, but the supply of land is fairly fixed - people aren't going to change their production of it in response to higher taxes...

Business rates have existed for a lot longer than we’ve had evidence in support of them. They were first introduced in their current form in 1990. Their heritage can be traced back further, to the Poor Law of 1572, and later the Poor Law of 1601. They’ve had more than a few facelifts since.

Are they popular? Other than with economists? Not really. Business rates have become the business lobby’s bogeyman. The British Retail Consortium (BRC) is particularly opposed.

“Business rates bills have continued to rise when property values have fallen,” Sir Charlie Mayfield, the BRC’s president has said. “Reforming the rates system would be a welcome boost for retailers and help drive investment in training and technology.”

The opposition from businesses on the grounds of their cost is rather strange, because it's not occupiers that end up taking the financial hit. Rather, it's land owners. This is the so called "incidence" of a tax, who ends up shouldering it. 

If business rates rise or fall by a small amount businesses aren't likely to face different costs, just correspondingly higher or lower rents over time. So there would be no more money for investment [as a result of reductions in Business Rates] after all.

It's the landlords who lose out as a result of business rates. Over a period of two to three years, three quarters of the change in business rates is capitalised into rents, according to a report from Regeneris, the consultancy. This has been backed up by work from the London School of Economics which examined properties in London, and a more recent paper using data from enterprise zones, which also came to the conclusion that it is landlords who end up taking the hit.

"Labour tax to hammer workers on £80,000"

... wails The Telegraph, despite not knowing how much tax Labour would make them pay if they get elected, which they won't.

Funny, The Telegraph's response was much more muted when Georgon Osbrown "hammered" families with children where one parent happens to earn a rather more modest £50,000 or more a year.

Pots, kettles. They are as bad as each other.

Reader's Letter Of The Day

It's nothing new or exciting, what is worthy of note is that he smuggled it into the Daily Telegraph readers' letters:

SIR – Tom Welsh (Comment, August 30) is quite right to say that updating our infrastructure doesn’t mean taxpayers should foot the bill.

Well-planned infrastructure improvements result in higher land values, which, if properly exploited, are nearly always sufficient to pay for them. Thus the public receives back the higher value created by public expenditure, and the Government does not have to borrow or levy taxes to fund the projects.

We need infrastructure investment. We don’t want it to be a burden on taxpayers. If we take advantage of the increased land value created by improvements, we can plan with confidence, knowing the costs will be met free of public debt.

Michael J Hawes, Newark-on-Trent, Nottinghamshire

Of course the Homeys will argue that making landowners pay for the benefits society bestows upon them is a tax; actually it's a user charge. And on a cash flow basis, the government would run up a debt to pay for the infrastructure and repay it out of the future user charges. But hey.

Ouch that hurt, but let's try again...

Torygraph hack Matthew Lynn has found some interesting stats on housing in Europe:

* The UK is now fourth from bottom of all 28 member states for homeownership
* 96% of Romanians live in owner occupied housing
* The average British home is now 96 square metres, the smallest in Europe

He suggests we might like to worry that the disenfranchised might turn to "populist, brain-dead redistributionist politics of the sort pushed by Jeremy Corbyn". But fear not, for Mr Lynn has a populist, brain-dead redistributionist solution of his own:

  ... why not re-introduce mortgage interest tax relief, abolished in the 1980s? That was the one policy that kick-started home ownership and it makes getting on the property ladder dramatically more affordable.

One last roll of the dice?  They wouldn't, would they?

Some sensible talk from the Torygraph

Everything you need to know about business rates, but were afraid to ask

"The opposition from businesses on the grounds of their cost is rather strange, because it's not occupiers that end up taking the financial hit. Rather, it's land owners. This is the so called "incidence" of a tax, who ends up shouldering it"

Given that a much higher proportion of residential land is owner occupied compared to commercial land, opposition to higher taxation of such is understandable until you observe that the highest value land is not majority owner occupied (London is majority rented). A very small but vocal group of residential landowners would lose out.

Homeys close ranks!

Texted in just now by fellow Homey-watcher MBK, from City AM:

City A.M., London's most popular business newspaper, today announces that its editor, Allister Heath, is to leave the company.

Heath, 36, is to join the Daily Telegraph as deputy editor.

Mr Heath has already pre-submitted his next half a dozen articles, in which he confuses the proposed Mansion Tax with a tax on wealth or with Francois Hollande's 75% top income tax rate; points out that the UK has the highest take from property taxes; and explains away obscene bonuses in the City of London as being "performance related".

The Daily Telegraph board has grunted its tweedy approval and asked the idealistic young chap - ever so politely - whether he might refrain from suggesting that planning constraints might not be an unalloyed good.

He'll learn, the young chap, he'll learn. Give him enough money to pay the deposit on a five-bed detached in the Home Counties and he'll soon see the benefits of keeping planning laws just the way they we like them... as to his crazy notions about having further runways at Heathrow or Gatwick... he'll learn.