Friday 29 July 2011

Killer Arguments Against LVT, Not (150)

The Daily Telegraph propaganda piece then opens with this:

Cash-strapped governments (1) have long wanted to grab a bigger share of the wealth we hold in housing (2), now the Organisation for Economic Co-operation and Development (OECD) says Britain should adopt a Continental European-style property tax.

1) Emotive words there! Whose fault is it they are 'cash strapped'? Primarily the government's, because they are spending too much (heck knows they are taxing us enough, albeit wrongly). But who votes for the government? It appears to be the case that "In general people who were under 34 were less likely to vote than those in older age groups" so it's middle aged and older who have nodded through this over-spend. It's the Baby Boomers and pensioners. It's exactly the people who say that house price rises are good for us.

And I hate to have to point this out, but until 2007, the Labour government was running a deficit of 'only' about 2% or 3% of GDP. They actually managed a surplus between 1999 and 2001 (hence and why I voted for them in 2001) and they only really opened the taps in 2008-09 (when house prices started falling) and hit a deficit of over 10% of GDP, the current lot have every intention of running up a similar deficit as well as having higher taxes on income and output for the foreseeable.

There's a myth doing the rounds that this deficit is because tax receipts collapsed when the recession hit, which is nonsense. Tax receipts as a % of GDP stayed pretty constant throughout, and in cash terms, tax receipts only fell by £14.5 billion between 2007-08 and 2008-09, which only explains away a tenth of the current deficit. To cut a long story - the rather scary annual public sector deficit of around 10% of GDP is purely down to deliberate and calculated overspending, it's not something that just happened.

And what are they spending all that money and all that extra VAT and NIC on? Propping up house prices, perchance, by cutting Council Tax, offering incentives to first time buyers and bailing out banks? Who's to blame for/has benefitted from the accumulated £1 bn public sector debt and accrued £1 bn public sector pensions liabilities, and who's going to have to pay it off?

2) Which makes a mockery of this second contention, which I will look at on Monday.

6 comments:

Bolivia Newton-John said...

Thought you might be interested in this excellent, timely article. Seems there is some sense being spoken somewhere at least! Though you can just imagine how readily the zealots at the Mailograph will write this off as more evidence of Auntie's Pinko Communist plot.

http://www.bbc.co.uk/news/business-14294021

Ed said...

Mark: A couple of typos at the end - debts etc should be 1 trillion not 1 billion.

Anonymous said...

With cars (registered "Keepers" not "owners"), if for any reason the registered Keeper defaults on either tax/insurance/MoT the car can be confiscated without involving the law nor judges.
If a "home" owner/registered keeper should, for any reason, default on the proposed property tax the result can be confiscation of the home, once again, without the need to bother the justice system.
Maybe that's at the core of your campaign, in other words, thieving.

Lola said...

"(hence and why I voted for them in 2001) - Sucker. I was not taken in at all by Bliar and the Mentalist. Mind you I remember Wilson. Tell me, why are Labour administrations always led by the most deceitful?

Bayard said...

Anon, the basis for your assertion is about LVT is? (Given that your assertion about cars is false, AFAIK)

DNAse said...

My understanding is that although Tax receipts/GDP may have been constant the key is what was driving the GDP. Initially it was rising private debt and then when everyone was mortgaged to the hilt and on their credit card limit, the government took over to keep the "economy" going with increasing public spending from borrowed money. Now everyone is deleveraging as house prices fall so we can't expect growth to be consumer demand led. Instead growth has to be supply side driven and this is going to need some serious incentives to business.