Wednesday 31 October 2018

Nobody move or the museums get hurt!

From the Evening Standard:

Fears that Britain’s flagship museums will be forced to scrap major exhibitions after Brexit can be revealed today.

Famous names including the V&A and the Natural History Museum believe they could be hammered with import taxes, the loss of key staff and huge cuts in vital research funding.

Some think they could be forced to temporarily close their doors in the case of a botched Brexit deal...

Etcetera etcetera.

As older readers will remember, there were no public museums or galleries in the UK prior to the mid-1970s...

"Jaguar Land Rover makes loss as sales slide 13%"

From the BBC:

Sales of Jaguar Land Rover cars have fallen sharply, taking the firm into a loss for the three months to the end of September.

The firm blamed lower sales in China for the decline, as well as uncertainty in Europe over diesel and Brexit. Jaguar made a pre-tax loss of £90m for the quarter, compared to a profit for the same period a year ago.

Car makers have high fixed costs and fairly low marginal costs, so they have to make up their minds which strategy to adopt:

a) Be a mass manufacturer. You make as many cars as possible to reduce fixed costs per car, enabling you to stay price competitive.

You even out good and not-so-good years by tweaking your finance deals and 'special offers' so that you can shift the same number of new cars for the same official list price each year.

In the really bad years, the shit hits the fan... but you might be big enough to be able to haggle for government bail outs. Or you make losses for years or even decades on end (like Vauxhall/Opel)

b) Be a niche/luxury car maker. Do like Morgan, and deliberately only make half as many cars as you could sell.

That enables you to either charge higher prices in good years; or charge lower prices and have the luxury of a waiting list, taking non-refundable deposits for a place on the waiting list to smooth cash flows.

If you're only making half as many cars as you could sell in good years and demand falls by half in bad years, so what? You can still sell every unit you actually make.

Dribbling them onto the market is also good for second-hand resale values, which in turn feeds demand for new cars in a virtuous circle.
Summary: Jaguar-Land Rover has messed up, it can't decide whether to be a niche/luxury car maker or a mass manufacturer and has got the worst of both worlds.
Update: Sobers makes the same point in the comments, but from the point of view of the consumer.

Fun with numbers

From The Guardian:

There are three options in tackling climate change. Only one will work

We’re now at a fork in the road: either we cut out fossil fuels completely, or we pass on a dying planet to our children

A "fork in the road" usually refers to a binary choice, i.e. go left or go right. To my mind, this jars uncomfortably with the notion of "three options".

And no amount of CO2 will ever lead to a "dying planet". It'd take something like a global nuclear war to get anywhere near that.

Tuesday 30 October 2018

"Australia leads the world...

... in dangerous debt".

Australian home borrowers are so in debt they will be forced to sell their properties for a loss next year in a plummeting housing market, an American banking giant fears.

With Sydney and Melbourne house prices already in a downward spiral, Morgan Stanley predicted Australians would collectively lose $700billion if they were forced to offload their real estate.

It described Australia as the world's most 'exposed' nation to a deleveraging disaster, where borrowers with little to no savings have to sell for a big loss to pay off their mortgages.

Ominously, Morgan Stanley predicted there was an 'imminent risk' this would happen in 2019 as house prices fell and credit growth slowed.

Morgan Stanley predicted Australian house prices would plunge by 15 per cent, from their peak, which would spell the worst real estate plunge since the early 1980s.

It's all a bit exaggerated, but this sort of thing is just part and parcel of Home-Owner-Ism. This is what people want. No point wailing about it now.

Daily Mail on top form

From The Daily Mail:

A British woman faces death by hanging after being charged with murdering her allegedly abusive husband with a kitchen knife in their idyllic Malaysian retirement home.

Petite Samantha Jones, barefoot and wearing an orange prison suit with the words 'Police Lockup' emblazoned across it, appeared sombre and nervous as she was formally charged with murdering husband John, 63, in Langkawi on Tuesday.

Samantha was charged with murdering her husband between 1am and 3am on October 18 at their £200,000 home overlooking paddy fields in a quiet village on the island.

Monday 29 October 2018

"Glaring tax divide between high street and online rivals"

The Daily Mirror does cognitive dissonance.

Compare and contrast their two tables:

£100 spent on the High Street
74p goes to Treasury in Corporation Tax
£13.20 on wages
92p on National Insurance
£2.06 on business rates

£100 spent online
20p goes to Treasury in Corporation Tax
£5.74 on wages
56p on National Insurance
26p on business rates

What are they missing/overlooking?

1. In both cases, up to £16.67 goes in VAT (the worst tax of all). That's as much as all the other taxes and wages paid by High Street retailers put together, and greatly reduces the relative difference between High Street and online.

2. I am well aware that large non-UK online sellers take the piss on corporation tax, but if High Street retailers are paying 74p corporation tax at an average rate of 19%, that means that their net profits after all costs are in the region of £4 per £100 sales, which looks OK to me.

3. It ignores the amount paid in rent, which is two or three times as much as the business rates. If included, this would increase the relative difference between High Street and online.

4. They ignore tax incidence.

a) The National Insurance (second worst tax of all) is borne by workers in terms of lower wages.

b) Business Rates are borne by the landlord, so do not increase overall costs either. For owner-occupier businesses, the business rates are largely just rent on that part of the land and buildings they never paid for in the first place - the price they originally paid was depressed by one-quarter or one-third because of the likely future business rates payable.

c) Our man of the moment, Mike Ashley, is perfectly aware of this, that's why he's going into battle with Debenhams' greedy landlords and demanding they drop the rents. Having achieved that, the business rates bills will fall of their own accord, being set at a percentage of rental values.

5. It is quite probably true that large 'online' retailers pay relatively little in business rates per £1 of sales, that's because they largely trade from out of town warehouses, where the location value is low. If High Street retailers think that they can sell as much stuff for the same price by relocating to the middle of nowhere, then good luck to them. Common sense says they can sell 2% more, or charge 2% higher prices, by simply being on the High Street, so big deal.

Thursday 25 October 2018

Daily Mail on top form

Arthur Collins's father, 55, ADMITS allowing his £1million home to be used as a cannabis factory after he was caught by police during raid to find his acid attacker son

Wednesday 24 October 2018

"Fancy having your piss boiled?"

... asks Thomas Hall, who emailed in this:

IEA announces winner of the Richard Koch Breakthrough Prize

The prize, supported by entrepreneur Richard Koch, sought to find the best and boldest entry outlining a ‘free market breakthrough’ policy to solve the UK housing crisis...

The winning entry proposes the ‘Land Purchase Act’ – a market-based policy that centres on how swathes of public land can be made available for people to build homes according to their own choice and preference.

The essay argues that the shortage of affordable housing in the UK has been caused by strict and outdated planning laws. Government interventions to address the issues – such as Help to Buy – have, on the whole, exacerbated the problem.

The submission makes the case for releasing surplus or underused public land to help people onto the housing ladder. Such a move could deliver as many as two million new homes, the majority of which would be built in areas where there is high demand for housing.

How the Land Purchase Act would work

• The government would enter into a contract with the occupier, who will take out a mortgage to cover the cost of building the property on the land.

• The occupier would decide on the style of house to be built. Furthermore, they would be given choice over the timescale and structure in which they gradually acquire private ownership of the land. This would include options such as paying rent for the land, purchasing the land at set intervals over time, or buying the land at a discounted rate after living on it for a set period of time.

• The Land Purchase Act would also reduce the number of planning restrictions on houses built on land made available under the policy...

Benefits of the policy

• It offers people a ‘hand-up’ rather than a ‘hand-out’ and puts them on a path to homeownership, rather than government dependency

Tuesday 23 October 2018

I am thouroughly fed up with all this rent seeking crap and Brexit shenanigans, so let's cheer ourselves up...

Evening over Suffolk

They [want to] own land! Give them money!

Everything that's wrong with the Home-Owner-Ist/supply sider overlap in four short paragraphs:

We should be honest: our housing crisis is one caused by the state, by draconian planning restrictions and convoluted finance policies.

Clearly, it's not a "crisis", it's a long term thing. Even if it were, it's not actually a "housing crisis", it's a "transfer of wealth crisis". Planning restrictions have little to do with it, it's all about the lack of good locations. Simply building more homes in good locations (while being a good idea) does not increase the number of good locations, if anything, it reduces it. And how is the tortured ASI suggestion of a massive extension of Help To Buy for a limited group of people (for that is what it is) not a "convoluted finance policy"?

More state intervention in the form of rent controls, as has been suggested in some quarters, would merely help the privileged few already here at the expense of the next generation and leave us all the poorer for it.

Nope. We had rent controls/tenant protection in one form or another from WW1 until 1988. That was a key element of Georgism Lite which helped keep selling prices down, so benefitted everybody who bought prior to the 1990s price surge. Rent controls are a second best policy, but better than nothing.

A massive expansion in council-owned housing while ending the right to buy will not be a long-term solution either. Sure, you’re no longer trapped paying rent to a private landlord. But you’ve merely swapped to paying rent forever to the state. What a choice.

The "massive expansion in council housing" up to the 1970s was another key part of Georgism Lite. It is and always was hugely popular - people would prefer a secure council tenancy for £80 a week to an insecure private sector one for £200. And the government's got to get money from somewhere, charging people rent is infinitely better than collecting taxes on output and earnings from 'everybody else'.

Our housing crisis will only be fixed by freeing up the market and building more – and we will continue to call on the government to do exactly this, and build more homes where they are most needed. But we need to make better use of our existing homes too. And that starts with giving people choice.

We've done this one, see above, it's bollocks.

Monday 22 October 2018

They [want to] own land! Give them money!

They're at it again, says Lola who emailed in this from The Times:

Cash handouts for Nimbys would remove obstacle to housebuilding - Mark Littlewood

The eye-watering costs of buying a property have gone untackled for so long that an entire generation of young workers is finding it impossible to get a foothold on the housing ladder, particularly in London and the southeast...

It appears that he is one of the supply siders who subscribe to the "lack of supply" myth. They miserably fails to distinguish between the supply of physical housing and the supply of 'good' locations (primarily high wage areas).

We've plenty of physical housing, and plenty of it is easily affordable, selling for less than or little more than original construction costs. But wages are much lower in those areas, so no real benefit if you buy there (unless you've retired). What we don't have is enough 'good' locations (by definition).

I tried to get a supply sider to address this, of course he side stepped the issue and just said we need more homes in 'good' areas. That doesn't increase the number of 'good' locations, it just makes better use of them! Once you take agglomeration effects into account, the 'good' locations will become even better (and the 'bad' locations even worse), thus cancelling out any downward pressure from additional supply in 'good' areas and leading to higher prices overall.

The Adam Smith Institute have come out with some similar garbage:

* Social tenants eligible for the Right to Buy should be given a Flexible Right to Buy, entitling them to buy a new home, using the value of their Right to Buy discount.

* The tenant’s previous home would then be sold, funding the discount and raising additional revenue.

* A conservative estimate of the impact would see 21,000 tenants take advantage of the scheme with £2 billion of discounts on £9 billion of stock and net receipts of £7 billion.

* An ambitious estimate of the impact would see 197,000 tenants benefit, with £83 billion of stock and £21 billion of discounts and net receipts of £62 billion.

* Housing stock would be better matched to people’s circumstances, with a cooling effect on overheated local markets.

* Some friction would be removed from labour markets, resulting in improved productivity and wages.

Words fail.

"Don’t ban plastics – ban littering"

A very sensible article in City AM.

Friday 19 October 2018

.. when an insurance company puff piece makes more sense than an ivory tower economics professor.

From Moneywise (emailed in by Mike W):

The actual cost of rebuilding a house only accounts for three-fifths (59%) of its market value, with the remainder based on factors such as its location, according to Direct Line.

While the cost of rebuilding the average property in the UK stands at around £114,000, according to data from the Royal Institution of Chartered Surveyors, this only accounts for 59% of its value, with the remaining 41% derived from factors such as good local amenities, transport links and schools.

(Caveat: Insurance companies overstate rebuild costs (to justify higher premiums) and the cost of rebuilding one individual house (effectively an infill site, with all the complications and restrictions) is far higher than the actual cost of that a house when it was built as part of a larger development. And Direct Line's table at the end showing wildly different rebuild costs in different parts of the country is clearly wrong.)

But their overall point stands, a large chunk of the value of a home is "location, location, location" (median one-half, overall average two-thirds)

Enter Josh-Ryan Collins of the UCL, with a fine article in City AM from a couple of days ago:

For those on the left, there is a lack of public housing due to decades of underinvestment by the state. For the right, the problem is excessively restrictive planning preventing the market from doing its job...

... since the turn of the century, [interest] rates have been falling. More and more loose credit has flowed in to an inherently finite supply of desirable locations, pumping up house prices at a much faster rate than incomes. As prices are driven up, so more financing is required for home purchase, creating a feedback cycle that eventually leads to a bust, as in the crisis of 2007-2008.

Rather than pushing against this feedback cycle, successive British governments have supported it by repeatedly reducing taxes on property, enabling windfall capital gains for those lucky enough to have bought at the right time, as well as fuelling demand with subsidies on mortgage debt and for first-time buyers...

Policymakers and financial regulators must recognise that banks will always be able to create credit at a faster rate than new homes can be built if they are allowed to. In the lead-up to the financial crisis, there were huge construction booms in Spain and Ireland, but prices kept going up as banks poured more credit in to the system. When it finally came, the bust was actually worse than in the UK.

To break the housing-finance cycle, demand as well as supply side policies need a rethink. Fiscal and financial policy needs to do the heavy lifting here. First, regressive council tax should be abolished and replaced with a tax on the annual increase in the value of the land underneath a property.

Second, banks need to be gradually weaned off domestic property and return to their traditional model of business lending.

All good stuff (except for his odd suggestion for taxing land value increases
rather than annual rental values).

Finally, here is the ivory tower nonsense (emailed in by Lola). Let's look at the headline and his three bullet points:

Strangely, building more homes does reduce a housing shortage

Clearly it does. But the UK does not have a housing shortage, it has a crass misallocation of the housing that is available. I have put this to him and his ilk many a time: "There are more buildings inside the M25 than in the whole of Scotland. So why are prices so much higher inside the M25?". They never answer that.

The idea the UK has a shortage of land to build on is completely bogus

Clearly, the UK has no shortage of actual undeveloped land. But, as JRC points out, it has a limited supply of "desirable locations".

Some of the prettiest places in Britain also have some of the densest housing

This is a nod to agglomeration benefits. It is a self-reinforcing cycle, more buildings -> more people and businesses -> higher wages and amenity value -> more buildings etc. But like most Faux Lib/YIMBYs, he is actually in denial about this. He can't bring himself to admit that denser areas tend to be more expensive, so he uses the bizarre euphemism "pretty".

Tax reform will not end the shortage of housing, any more than taxing water in a drought

Price rationing is the best form of rationing, whether that's "desirable locations" or water -> Land Value Tax.
The rest of his article is feeble and failed takedowns of JRC's much better explanation of real life. He sticks in a KLN for good measure:

Good luck imposing swingeing taxes not matched to cash flows on a homeowner majority.

The majority of owner-occupiers, i.e. those in work, would be paying a lot less tax if they paid tax on the value of public services at their location instead of paying taxes on earnings and output/consumption. I fail to see how a tax cut is "swingeing". So it's clear - if it wasn't already - that maths and statistics aren't his strong points.

Even if you did, most people would still have less housing than they would like.

Quite possibly so. But every household having 'a bit less' than it would like instead of some having twice the space they need and others having only half; or pensioners in high wages areas swapping places with workers currently forced to commute long distances;has got to be an improvement.

He rounds off with this evidence-free platitude:

There are easy ways to improve the planning system that would lead to vastly better places and more homes over time.

Can we please stop blaming house builders for high house prices? They are ruthlessly exploiting high prices, not actually causing them. In their defence, they have consistently increased the supply of housing faster than population growth in any particular period (apart from 2009 to 2012).

Like any sane business, they just stick to the profit maximising level of output, which happens to be slightly faster than population growth (= approx. one new home for every one-and- a-half additional people). It is quite clear that if you give them more planning permission than this level, they will simply stockpile it. Which is why UK home builders have a decade's worth of plots with planning in reserve.

And I know that home builders do not have a formal or even informal cartel, it is just that they all do the same profit-maximisation calculations and have the same input costs, so they all make exactly the same decisions and move in tandem, as evidenced by Neal Hudson's fine chart showing that in the short term, they build one new home for each nine existing homes which are bought and sold in any year (scroll down to Fig 5 here).

Thursday 18 October 2018

Nobody move or the French tourism industry gets hurt!

From the Daily Mail:

Britons could need visas to visit France if the UK does crash out of the EU without a deal.

As Theresa May arrived in Brussels for a crunch summit, the French government ramped up its preparations for a no-deal Brexit and said Britons would become ‘nationals of third parties’ and would probably need travel permits to visit.

That's their unilateral decision, isn't it? You can't blame that on Brexit.

Wednesday 17 October 2018

The Disappearing Homes Conundrum

I commend a fine article, backed up with logic and hard numbers by Generation Rent.

What happens to rents if landlords exit the market? Nothing.

Unsurprisingly, their research shows that average rents paid fall slightly, because it is higher earning tenants who are most likely to become owner-occupiers, and they were the ones paying the higher rents.

Tuesday 16 October 2018

Daily Mail on top form!

From The Daily Mail:

A retired company director who covertly filmed a young woman getting changed at his luxury home has been jailed for eight months.

Allan Austin, 66, installed a hidden spy camera at his home in Cheshire because he 'liked the figure' of the victim...

When officers searched Austin's £500,000 detached house in the village of High Legh, near Knutsford, Cheshire they found the hidden camera which was linked to his computer and iPad.

Monday 15 October 2018

Help To Buy - the sequel

Having established that the previous iteration of Help To Buy was an unqualified success, enabling 'home builders' to bump up their selling prices by ten percent, the Homeys at the Centre for Policy Studies have suggested a new wheeze, namely giving sitting tenants a 6.66% deposit if they buy the home they are renting, pushing up prices by 6.66% compared to the baseline; and then reducing the ex-landlord's CGT bill by one-third as a bonus (emailed in by Lola).

The maths and logic in that paper are all over the place, but it boils down to that.

From page 18:

... this is a substantial reduction in their tax bill and could encourage them to sell up.

But if they did not want to sell up, then that is their business – no one should force them to dispose of their own property, or punish them for owning it.

This is dog-whistle for "no one should force them to pay a market rate for the value of all the public services which help maintain the value of their land and buildings", only tenants should pay for those, and pay twice over. They pay for the cost with PAYE and VAT and for the value through the rent they pay. To use their own terminology, tenants are being punished twice over.

Most lolzworthy of all is the sub-heading to the report:

How to restore home ownership by turning private tenants into owners

The easiest - and tried and tested - way of doing that is by imposing rent controls and/or making it nigh impossible to evict a tenant. Rent controls don't benefit tenants as such, the end result is more owner-occupiers, i.e. ex-tenants who can save more towards a deposit and pay lower prices. Yes, yes, I know this is very much a second best solution, but beggars can't be choosers.

Friday 12 October 2018


I'm not particularly PC, but occasionally, the double standards really hit you.

You are allowed to call a fat bloke at work a "fat bastard" or make derisory comments about his weight, by and large, said fat bloke will either laugh it off or trade insults. No harm done.

I doubt that a fat woman would take this sort of thing with equanimity. She'd probably go crying to all and sundry, her mates would shun you and you'd probably be severely reprimanded (while trying to keep a straight face). Unlike defamation cases, truth is no defence.

Thursday 11 October 2018

"Hammond plans tax crackdown on synthetic self-employed"

From the BBC:

The Treasury is finalising plans to overhaul tax rules which allow self-employed people to avoid paying national insurance contributions. The move will be targeted at people who set themselves up as private companies to take on work.

The BBC understands it could be announced in this month's Budget. The Treasury believes a third of people claiming self-employed status as a "personal service company" are actually full employees and should pay more tax.

Quite simply, employment income is taxed at insanely high rates. Self employment income and income routed via a company are just taxed at high overall rates.

So this is bound to happen, and anybody who thinks they are on the right side of the line will do this. And plenty of people who clearly aren't. Presenting a regular daily or weekly TV or radio show is slap bang in the middle of any sane definition of 'employment' FFS.

The answer is simple. Merge VAT, National Insurance, income tax and corporation tax into a single rate of tax applied to all earned income at the same rate. You can make it less regressive with a personal allowance or a Citizen's Income credit.

Until and unless they do that, this sort of tomfoolery will continue and we go in ever decreasing circles.

It says without reform, high levels of non-compliance with tax rules could cost HM Revenue and Customs, which collects taxes, £1.2bn a year by 2023.

Sod off, it costs HMRC nothing. That's like me counting all the goals I never scored in a Cup Final. It costs 'everybody else' £1.2 bn, because they have to pay in more to make up the difference.

Saturday 6 October 2018

A bad idea is still a bad idea, even if you change the justification.

I thought it was just Faux Libs like Allister Heath who advocated this sort of corporation tax reform.

He - encouragingly - starts off by making good arguments against turnover taxes (like VAT):

Corporate turnover taxes would hit struggling and young firms disproportionately. Loss-making firms would have to hand over money to HMRC, tipping them over the edge. A pro-cyclical turnover tax would trigger an epidemic of bankruptcies.

VAT raises four times as much as onshore corporation tax and is much more economically damaging (and regressive), so why aren't they talking about that first and foremost?

Then comes the inevitable shite:

There is a better [way of reforming corporation tax].

We should just tax cash distributions to investors and creditors when they leave the company – dividends, share buybacks and interest – as we tax distributions to employees. A similar system works in Estonia. True, some firms would be able to delay their taxes, and transfer pricing issues would remain. But it would be a huge improvement.

No it wouldn't. Massive loophole alert.

* A share buy-back is when a company redeems its own shares at a premium (i.e. its a return of capital and a dividend rolled into one), so they say they'd tax that. But a dividend can be dressed up as a return of capital (subtly different to a buy-back), which might or might not be caught by a tax on share buybacks. What happens if it is another company buying the shares? What if A plc buys B plc shares and B plc buys A plc shares? You'd need rules for that as well.

* What about dividends from a UK subsidiary to its overseas parent company or overseas shareholders? Under most double tax treaties these are exempt from withholding tax (or subject to reduced rates), so all those would have to be renegotiated, and we know how good the UK government is at that. What about a dividend paid to a UK parent company which under UK tax rules is and always has always been exempt on the recipient (in my working lifetime, at least)?

* What about all the dividends paid to tax-exempt recipients, pension funds, ISAs and so on? They're still moaning about Gordon Brown's mythical "pensions raid" so no Chancellor in their right mind would contemplate it.

* Some companies are in no hurry to pay dividends. Microsoft famously did not pay a dividend until 2003. Apple is so desperate to avoid corporation tax that it just piles up (untaxed) profits in subsidiaries in tax havens, which in turn invest in corporate and government bonds. So Apple is becoming like Siemens, a bank with its own eletronics division. This would just make such tax avoidance/deferral even easier and more respectable.

* Interest payments can be dressed up in the same way. Instead of paying £5 interest on a £100 bond, the company just repays £5 of the £100 principal, and so on.

Summary: receipts from the proposed tax on distributions would be a tiny fraction of current corporation tax receipts. Which is of course what the Faux Libs want.

The rationale for this is that corporation tax is a tax on capital, which is a lousy rationale as that is exactly what corporation tax isn't. I accept this would be more obvious if 100% first year capital allowances were extended to big companies, a good idea in itself, but hey.

Corporation tax is a tax on non-reinvested profits i.e. accumulated cash not used in the business. Whether the cash is sloshing around in a company's bank account or a shareholder's doesn't make any difference to the outside world, so it is cleaner and simpler to charge corporation tax at source and subject dividends to a lower rate of income tax than other income (to give credit for the corporation tax already paid).

We actually had this ideal compromise briefly in the last couple of years of the Labour government prior to 2010 (effective overall tax rates on dividend income were 20% for basic rate taxpayers and 40% for higher rate taxpayers, exactly the same rates as for earned income, if you ignore the NIC), but Osborne is now heading backwards in time to double-taxation of dividends.
For some reason, my internet friend Martin Farley recommends that the Green Party adopt this tomfoolery, with a couple of tweaks:

Corporation tax would be abolished and, instead, distributed profits from companies will be taxed at the point of distribution, including: dividends, share buybacks, additions to cash holdings, payments to parent or subsidiary companies (both onshore and offshore), and all other distributed income. This will be done at the basic rate (32%) for non-UK income tax payers and inter/intra-company distributions.

We believe that this will raise a further £12bn in revenues due to the more effective taxation of income from corporate profits and at a rate higher than current Corporation Tax. ( We believe this is a very conservative estimate, but will accept a challenge if anyone can produce a more reliable figure).

OK, he's addressed the overseas and inter-company issues, not knowing how difficult these will be to enforce. In which case, a subsidiary will just 'lend' its profits to its parent company. He says the tax will apply to "additions to cash holdings", which is going full circle and is exactly what corporation tax already is (assuming 100% capital allowances and debtors/creditors being paid on time).

Neither side has addressed the issue of 'transfer pricing', which is the biggie here, the UK government could, if it were so minded, shut this down under existing legislation, but for policy reasons does not do so (unclear to me why).

The rationale, interestingly enough is exactly the opposite of the Faux Lib rationale:

This is not designed as a tax increase, but rather a tax simplification that will equalise its burden and significantly reduce avoidance (and thus increase revenues).

In time, this will be the sole tax levied on income, thus reducing the administration of tax by all concerned and ending the perception of unfairness by those who experience double or triple taxation on income, while others avoid it altogether.

Summary: the Faux Libs are pushing for this to make tax avoidance/deferral much easier and reduce revenues (even though they don't say that); Martin Farley is encouraging the Greens to adopt this as policy because it will reduce avoidance/deferral and increase revenues.

All very Alice in Wonderland.

Friday 5 October 2018

Got to keep the party going...


Now that the PPI scam (as in the bureaucratic scam) is coming to an end I was wondering what those bureaucrats would next invent to keep the 'mis-selling / concentrate benefits-distribute costs' ball rolling, and now we know.

Whatever happened to 'personal responsibility'?

Killer Arguments Against Citizen's Income. Not (19)

From an idiot on the left (emailed in by BenJamin):

The original philosophy behind basic income... came from neo-liberal economists who where absolutely fine with people getting unearned income. Their entire system of economics was a justification for unearned interest, profit and rent.

They were also dead against people getting needs based benefits. The basic income proposal was a wedge to be used to destroy the existing welfare state, and the moral principles on which it stood. Once it was in place, they would go ahead with charging for all sorts of things which were now distributed according to need, and cancel existing needs based benefits.

Give people enough cash to barely survive, and then leave the rest to the magic of the market. Minimum wage legislation would go, as would unemployment benefits. Since people would not loose [sic] any benefits by going to work, and since their survival was already largely subsidized [sic] by the state they would be willing to take on work for lower wages. It would be the ideal support for the gig economy of micro-jobs.

This first bit is all bollocks. Simplifying the welfare system and National Minimum Wage legislation are two completely separate topics, but I reproduce here to set the scene and make fun of his crap spelling...

There would be a downward pressure on the lower end of the labour market. The net effect on the class distribution of income would be that those on slightly above average wages subsidize [sic] low wages, whilst low wage employers reap the benefit, something which already happened with Gordon Brown’s tax credit scheme.

Working Tax Credits are only paid to people in low paid jobs. So they might - indeed - have depressed wages at the lower end. A basic income paid to all would by definition have a much, much smaller downward impact on wages at the lower end (if any).

From idiots on the right:

A CONTROVERSIAL Labour Party plan to give everybody in the UK taxpayers money, regardless of whether they are in work, would encourage unemployment and make the poor even worse off according to a stunning new report.

The new study, from the Centre for Social Justice, concludes the proposed policy would create a “massive disincentive for people to find work”.

Yes, to some extent, there will be some people who would have otherwise taken a really low paid job for a few hours who no longer do so. Which means that employers will have to offer slightly higher wages.
I wish these I could put these fucknuts in a room together, with one side explaining why it will push wages down and the other side counter-arguing that it will discourage people from taking low paid jobs until they realise the two arguments are a) very weak and b) cancel each other out anyway.

Funnily enough, both sides go with the complete lies that welfare simplification is
a) unaffordable, and
b) would leave the poorest even worse off (as if The Daily Mailexpressgraph gives a shit about them anyway, at least the Guardianstas do in a back-handed sort of way).

Thursday 4 October 2018

Meaningless tautology/platitude of the week

From The Metro:

‘Anyone can succeed, given the opportunity,’ says May

Well duh, doesn't answer the question whether everybody is given the same opportunity (they aren't), and even if they were, not 'everybody' can succeed, most of us just bumble along*.

She then gives examples of a few Cabinet Ministers with 'humble' backgrounds and misses the point that by definition, only a few people will ever become Cabinet Ministers. It's a bit like the Lottery presenters on telly saying "Good luck, everybody!".

Also, the article uses two different spellings: "Barnado's" and "Barnardo's", only one of which is correct.

* For clarity, I have somehow hit the sweet spot by simply always taking the line of least resistance/doing the most obvious thing and have bumbled gently into a well above average job/lifestyle/home with mortgage long paid off etc. Some might actually consider me to be a 'success story'. If only Her Indoors hadn't decided to piss away half of it on private school fees...

Two apparently unrelated headlines.

From the BBC:

Car sales plunge as Nissan warns on Brexit

That's two quite distinct issues which have distinct causes. One did not cause the other, despite what the BBC's headline implies.

Why have car sales 'plunged'..?

Since 1 September, all cars sold in the EU have had to undergo a new test known as the Worldwide Harmonised Light Vehicle Test Procedure. This has replaced all existing tests of emissions and fuel economy and has caused carmakers to struggle to cope.

SMMT chief executive Mike Hawes said: "With the industry given barely a year to reapprove the entire European model line-up, it's no surprise that we've seen bottlenecks and a squeeze on supply. These are exceptional circumstances, with similar declines seen in other major European markets. The good news is that, as backlogs ease, consumers and businesses can look forward to a raft of exciting high-tech cars and a market keen to recover lost momentum."

So, because of the EU rushing through some new regulations.

What are Nissan (and most other manufacturers) worried about..?

The carmaker said that frictionless trade as part of the EU single market had enabled the growth that had seen its Sunderland plant become "the biggest factory in the history of the UK car industry, exporting more than half of its production to the EU".

It added: "Today we are among those companies with major investments in the UK who are still waiting for clarity on what the future trading relationship between the UK and the EU will look like. As a sudden change from those rules to the rules of the WTO will have serious implications for British industry, we urge UK and EU negotiators to work collaboratively towards an orderly balanced Brexit that will continue to encourage mutually beneficial trade."

And rightly so, the UK government and the EU are equally to blame for messing manufacturers around like this.

(Simply rejoining EFTA and remaining in the EEA would solve most of this at the stroke of a pen; why Nissan assume the UK will leap straight to WTO rules instead of shouting "Rejoin EFTA" from the rooftops is unclear.)

Wednesday 3 October 2018

Bureaucrat Worried About His Job


By observation and logic regulationism was at the heart of the events leading up to the 2008 credit crisis.  It was the predictable, abject and unremitting failure of governments and their bureaucratic Satraps engaging in credit expansion and niaive and incompetent (based on their ignorance and their own self regarding arrogance) bank regulation especially as regards the quantity and quality of their capital requirements that encouraged Banks in their own (and ultimately unsustainable) monetary expansion.  The result being an absolutely text book Austrian Business Cycle theory failure.

In fact the sheer quantity of regulationism has made Banking a de facto nationalised industry: a state sanctioned specially privileged cartelised supplier of a monopoly product engaged in couterfeiting.

So then we get self serving bureaucrats like Randall clamouring for more regulation post Brexit. One might have thought he was worried about his job.

Killer Arguments Against LVT, Not (446)

Several years later, I have realised that rebutting arguments against LVT is easiest if you work backwards from them to derive your opening argument *for* LVT, i.e. here.

Let's take the category A to C arguments against from here, i.e. the whole Poor Widow Bogey, land doesn't generate income stuff. Rebutting them is now easy.

A. Poor Widows in Mansions can roll up and defer anyway, that means their heirs will inherit less, but so what? Why should they expect other taxpayers to subsidise the value of their inheritance? That's *upwards* redistribution, the very worst kind. Better alternatives are downwards, universal or none at all.

B. The Diagonal Comparison answers itself. A semi-mythical Poor Widow in a Mansion will have a higher LVT bill than the entirely mythical millionaire in the flat next door, but so what? The government i.e. the taxpayer is spending a lot of money on maintaining the value of her mansion. A little old lady who smokes and drinks pays more fags and booze duty than a teetotal millionaire. And of course, the millionaire will be paying far more income tax than the Poor Widow (or her heirs) are expected to pay in LVT.

C. Land doesn't generate income, (it clearly can, ask a landlord and what about the moaning heirs from above? Owner-occupiers are receiving non-cash benefits etc, but let's just accept the premise). So what? Maintaining the value of any plot of land costs the government i.e. taxpayers a lot of money. Why shouldn't landowners bear the cost directly by paying in proportion to the benefits i.e. the land value? By analogy, my cars don't generate income for me, but I don't expect the government to pay for petrol and repairs.

Tuesday 2 October 2018

"Why the price of buying a second hand car is dramatically rising"

A strange article on

Since the start of the decade, the price of the average second hand car has risen by more than 40% due to an excess of cutting edge models available on a pre-owned basis. The average price of a second hand motor is now a STAGGERING £13,000, as dealers are selling vast numbers of nearly new vehicles, rather than malfunctioning old bangers.

Some are attributing this increase in price to the advent of pay-monthly finance deals for new motors, which is leading to a higher turnover of new cars. As the era of car ownership starts to end, with “usership” becoming the new industry buzzword, motorists are hanging onto their vehicles for a fraction of the time they once did.

New models available second-hand despite being just one or two years old can still demand MASSIVE prices, driving up the average cost of everyone’s favourite old reliables. That’s backed up by research from Auto Trader, who report that sales of used cars that are less than 3 years old have increased by a massive 32% in the past five years alone... the average price of a new car is now £26,105―meaning that even with these price increase, canny drivers can still save BIG by shopping around and buying second hand.

What is strange about the article is that it's not clear whether they think this is A Bad Thing (price of second hand cars is up, true) or A Good Thing (plenty of three year-old cars to buy for those who want to save 50% off list price, also true).

This is because they are doing a diagonal comparison - the typical second hand car eight years ago was 6 years old and sold for £9,000, today it's three years old and sells for £13,000 (or something like that).

On a like-for-like basis, i.e. the second hand price of an X year old car today compared with the second hand price of an X year old car eight years ago, it strikes me that second hand car prices must have fallen, which is A Very Good Thing Indeed AFAIAC.
To put this in perspective, according to the SMMT's excellent Motor Industry Facts, new car registrations have been between 1.9 and 2.5 million a year since the year 2000 = about 30 million new cars = about as many as there are still on the road = average age of a car on UK roads is 9 or 10 years.

The number of cars on the road has increased from 25 million to 31 million over the last 18 years (see previous link), meaning that nearly as many are scrapped (or exported) as there are new registrations.

Monday 1 October 2018

Philip Hammond - attention to detail FAIL

From The Independent:

Philip Hammond has launched a scathing attack on Boris Johnson, saying he does not expect the former foreign secretary to become prime minister...

He went on to suggest Mr Johnson could not do “grown-up politics”, adding that he had ”no grasp of detail” on complex subjects like Brexit.

The former London’s mayor’s greatest achievement to date had been introducing the “Boris Bike” cycle scheme in the capital, Mr Hammond said.

Those with longer memories and/or who pay attention to detail know that pay-per-use bikes were already available, albeit on a smaller scale, several months before Boris Johnson became Mayor of London. See here or here.