Friday, 16 January 2015

Killer Arguments Against LVT, Not (350)

The Taxcollector's Alliance have churned out more misinformation in The Times:

It’s not just incomes that politicians have increasingly helped themselves to. The amount that people have had to pay the government to buy a home has hugely increased over the past half century.

According to the building society Nationwide, in 1958 the average house price was £2,050. Stamp duty wasn’t payable until you bought a house for £3,500 — 71 per cent more than the average. Even then it was levied at 0.5 per cent.

If that were still the case today, you wouldn’t pay any stamp duty on homes worth less than £323,000. Instead, even after the reforms made at the autumn statement, families buying the average house today for £271,000 have to write the government a cheque for a whopping £3,550.

a) Does this man not think about what he writes? He describes £3,550 in SDLT when you buy a house to be a "whopping" amount of money. Fair enough, that's his opinion and he's entitled to it. But what about the other £271,000 a buyer has to hand over? Is that a mere trifle?

b) Adjusted for inflation, £2,050 in 1958 is £43,144 today, i.e. close to build cost and the land was more or less free. Two-thirds of the £271,000 today is land value, it is privately collected tax.

c) He fails to mention that for all but the cheapest homes, Council Tax is considerably less than 1958 Domestic Rates would be, adjusted for inflation. Thus completely disproving his next point...

... a YouGov poll late last year showed 72 per cent of the British public in favour of a so-called mansion tax. Given that Labour has already allocated to the NHS the projected £1.2 billion that it will raise, if revenues fall short they will have to either cut NHS spending, or increase the tax. There’s no doubt which option they’d go for.

If the mansion tax is introduced, it will be here to stay and most of the 72 per cent in favour will end up paying the price. We must ensure it’s never allowed to see the light of day.

a) If this were a Poll Tax, then yes, the 72 per cent ought to be worried about it. But the Mansion Tax is an ad valorem tax. So even if it were 1% or 2% of the price of a house, people in average houses wouldn't be paying that much. Just like people on low to average incomes don't pay much income tax (they pay far more in NIC and VAT than in income tax).

b) House prices would fall by the amount of the tax, so future buyers will be unaffected and, after a few decades, everybody will be unaffected. You could argue that some people who inherit in future will be worse off than they would have been, but other people will be better off, so that cancels out.

c) The Mansion Tax or LVT or whatever has exactly the opposite effect to government deficits. LVT shifts taxes from the future to the present (and ultimately, into the past), government deficits shift taxes from the present into the future.

Call me boring, but I actually do worry about government deficits* and the national debt, and I do support LVT over other forms of taxation, so I'm at least consistent.

* I voted Labour in 2001 because from 1997 - 2001, they managed to reduce the national debt as a % of GDP slightly. History proved me wrong on that one.


mombers said...

I like the hack around the paywall! Interesting how the Times is so vocally against the MT but its readership has become more exclusive due to the paywall. You could expect KLNs from the Torygraph but isn't the Times meant to be more towards the centre of the political spectrum?

Lola said...

mombers. I think the Times is 'Establishment', hence the anti LVT stance. The establishment to a man being rent seekers of one kind or another.

MW. You'd think the TPA would actually think about 'taxes' in the sense of how they work. That's what so depressing. They do do some good work, and then they come out with crap like this.

Ben Jamin' said...

@ Mombers

Since John Witherow (a fellow SA) became editor a few years ago, The Times has taken yet another step to the reactionary right.

I remember they were quite supportive of John Major, but then backed Blair because it looked as though the Euro-sceptics were getting the upper hand in the Tory party.

Since the downfall of Blair, they've been going further right every year.

I'd say it is now a cross between the Mail and the Telegraph. A full on homey propaganda machine.

I've been a subscriber for about 5 years, but I cancelled it last week. Sod helping to pay their wages.

DBC Reed said...

The Establishment paper par excellence ,the Financial Times is solidly pro LVT.FT's Martin Wolf, the Establishment's eminence grise , is pro LVT and pro stripping banks of the power to create money.(And then there's the Pope who thinks undue respect for market forces is blasphemy.)

Mark Wadsworth said...

L, as far as identifying government waste goes, the TPA are brilliant. As far as taxes go, they are totally corrupt.

BJ, DBC, The Times is a load of rubbish, frankly, without the embedded humour of the Mail or the Telegraph. And it's a Murdoch thing, so fuck 'em.

But that wasn't really the point here.

DBC Reed said...

Lola was saying that the Establishment are rent seekers to a man. Only the petit bourgeois wannabe establishment of the Mail Express and Telegraph are invariably Homeownerist and ,although we laugh at their careful recording of the price of murder victim's houses etc the papers' readers think this is information of primary importance.

Mark Wadsworth said...

DBC: "the Establishment are rent seekers to a man"

Correct. End of. Full stop.

Lola said...

@DBCR Generally agreed about the FT. I was responding to Mombers remark about The Times

Bayard said...

"As far as taxes go, they are totally corrupt."

But they are right about SDLT, it is a shit tax, like all transaction taxes.

Mark Wadsworth said...

B, indeed, transaction taxes are the worst taxes. Which is why SDLT is a shit tax. As it Financial Transactions Tax.

But the TPA oppose SDLT because it is a tax on land values, and the powers that be oppose FTT because it is a tax on banking.

Bayard said...

"But the TPA oppose SDLT because it is a tax on land values,"

No greater treason, eh?