Thursday 7 January 2016

Torygraph reports common sense on Business Rates

Torygraph: Landlords bear brunt of rates rises, hurting wider UK economy

Now if BR were converted to tax the land element only, the Northern Powerhouse would become a reality as building or improving nice shops and offices up north would attract little or no UBR. London would also benefit as enhanced development would not increase rates and the landlord could keep the increment that they have actually produced themselves...

10 comments:

Dinero said...
This comment has been removed by the author.
Dinero said...

Thats actually quite funny . The complaint is .

" I don't like you taking money off of him because then there less money for me to take some money off of him .Please understand this, Take some money off someone else"

Its funny in a Marlon Brando voice.

Mark Wadsworth said...

Typo? That headline should be "NOT hurting wider economy"

mombers said...

MW, I think insofar as buildings are taxed, I think that does hurt the economy (and also tilts the scales towards London and away from marginal sites). It should be a no brainer to at least turn UBR into a site only tax. Would be interesting if devolution of UBR would ever extend to allowing councils to change it fundamentally, e.g. make it site only and payable by the owner, not the occupier. Chances = naff all for now though.

Dinero said...

So why are they called "Rates" if they are charged to the tenant.

Mark Wadsworth said...

M to some degree yes. But it's not extreme. BR is about one-third of the rental value, so it's worst case like a 33% tax on rental income from bricks and mortar. Seeing as the rental yield on bricks and mortar incl. BR is 9% that means the landlord still gets 6% return on bricks and mortar which is better than on any other fairly safe investments.

Din, look it up on Wiki!

Dinero said...

>Mark
So the the occupier pays different rates depending on the rental value. So its a location and rental value tax but government send the bill to the occupier not the landlord, as the occupier is the beneficiary to the location of there business.

Is that the rational as you see it.

Is it the case that landlords not tenants paid the rates in the 70's. If so how did it come about that landlords of domestic dwellings payed the Rates in the 70's but if their tenant was a business they did not pay the rates, the occupier paid business rates. Or were was there two separate rates paid simultaneously on the same property in the 70s.


Mark Wadsworth said...

Din, don't take my word for it, start with the basics.

This was pro to-Georgism - levy a tax on land values to fund a citizen's income. Let's not get bogged down in technicalities.

Dinero said...

How can you explain a tax based on rents when it is charged to the rent payer , rather than the rent receiver.

It is unusual to present a tax to the payer of the tax based on their expenses. ie “your costs of doing buisiness in this property are high and so therefore it is deemed that you are liable to pay more tax”. Normally taxes are presented as a tax on the payers income ,not their expenses. And so the explanation is that business rates are supposed to be a tax on the properties value, but for some historical, or other reason ,they are presented to the tenant. Therefore the landlords in the Telegraph article have got in back to front, they are complaining that an unintentional consequence of the tax is that its small part falls on them , when in fact the opposite is the case , the intention of the tax is that the greater part the tax falls on them.

Contact YPP said...

Din: "the landlords in the Telegraph article have got in back to front, they are complaining that an unintentional consequence of the tax is that its small part falls on them , when in fact the opposite is the case , the intention of the tax is that the greater part the tax falls on them"

Bingo, got it in one.

We have done this a zillion times, legal and economic incidence of a tax.

Business Rates and Council Tax are ultimately borne by the landowner; VAT is borne by the producer not the consumer; booze and fags and petrol duty are borne by the consumer etc etc. Depends on relive price sensitivity of supply and demand.