From the FT:
Sir, David W Green (Letters, December 1) is right to point out that some money goes the way of spenders from savers through the low bank interest rates that so disadvantage savers.
But most of the low-rate bank lending goes on property, often producing bubbles, which Martin Wolf would cover by imposing a from hereon land value tax acting in a Pigouvian manner to disincentivise further over-investment in the inelastic supply of land.
DBC Reed, Northampton
Wednesday, 3 December 2014
Reader's Letter Of The Day
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5 comments:
Budget today changed stamp duty, which we are of course told will help buyers, but actually just gifts the transaction tax difference to the homeys and fuels the bubble for a little longer.
e.g. BBC reports "George Osborne says the stamp duty in changes his Autumn Statement will benefit 98% of homebuyers" and prints the comment:
"13:57: Stamp duty Andrew Montlake, of London-based mortgage brokers Coreco, says: "Moving to a more sensible system that works in much the same way as income tax means that many buyers will from midnight tonight, suddenly have some more cash in their pocket. For example someone purchasing at £550,000 will now pay £17,500 rather than £22,000."
He's right that buyers will have more cash in their pocket, but what will they do with it? Let the rival buyer for their dream home out bid them with the new bigger budget they now also have, or increase the offer by the exact amount of the stamp duty?
OTOH, exactly! SDLT is a shit tax, but it does have some slight dampening effect on prices at least.
Very nicely put, Mr DBCR.
MW. My first thought on hearing GO say it. I really do not know how these people get away with this idiocy. Don't the know the truism that 'all profits return to rent'?
Lola, ditto any fiddling with business rate, but who cares about the economic effect when there's an election looming?
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