Killer Arguments Against LVT, Not (447)

Exchange on Twitter with CityUnslicker, who has apparently left the real world far behind to a parallel universe where democracy has been suspended and you are not allowed to draw analogies from what actually happens in the here and now:

MW: Seeing as govt spending goes largely into higher rental value of land, fairest kind of tax is a service charge based on rental values aka land value tax. The more taxes it replaces, the better.SDLT, council tax and business rates should be first to go.

CU: You can kiss goodbye to the high street then even more so than now with that policy.

MW: What's morally or economically wrong with paying rent? Why should public services be paid for by group A (workers and businesses) for the benefit of group B (landowners and banks)? That's Communism under a different name.

CU: The state owning all the land and the [sic] deciding who can rent it off them and what price IS communism.

MW: Lying again! Here's the actual system: Landowners continue to own land. Market in land continues between private buyers and sellers. Buyers and sellers agree prices, landlords and tenants agree rental values. Govt levies a service charge on value of services provided.

CU: I [sic] your logic is faulty. If a renter can't pay the government will foreclaose. If the government raises the tax high then it will acquire more land. The logical procession [sic] of LVT is to enact communism. There won't be a free market in land when the got has acquired all the land!

MW: yes, govt will foreclose, sell land and buildings to another private buyer, retain the arrears and pass the balance to the previous owner.

That's why collection rates for business rates (quasi-LVT) are the highest of all taxes for the least faff on either side. The simple threat that the govt *could* do this means that 96% of payers pay in full on time.

So your claim is as fatuous as me saying "if a borrower can't pay the mortgage, the bank will foreclose. If the banks increase interest rates, then they acquire more land. The logical progression of banking is to enact bank control over the whole economy". That's never happened.

Ruth Davidson: Maths Genius

H/t Lola, from The Herald:

Business leaders have warned the tax burden on high street shops is disproportionately high. Ms Davidson said: “The retail sector currently makes up 5 per cent of the UK economy but pays 25% of all business rates, over £7 billion per year.”

That's about as helpful as saying "The haulage industry pays 90% of all diesel fuel duty" or "Smokers pay 100% of all tobacco duty". Business Rates is a tax on valuable locations, and retail premises are usually in the most valuable locations (town centres). It's as broad as long, if there were no Business Rates, rents and purchase prices would be correspondingly higher.

Having flunked the logic bit, she's wrong on the facts as well. From the House of Commons retail briefing paper:

In 2017, consumers in the UK spent around £406 billion in retail purchases [about 20% of GDP]. In 2017, the retail sector as a whole contributed £194 billion to UK economic output (11% of the total), measured by Gross Value Added or GVA3; this was an increase from £190 billion in 2016.

In 2016, the sector employed 4.9 million people (20.5% of the UK total), and contained 374,000 businesses (15.5% of the UK total).

We can argue whether the retail sector is 11% or 20% of the UK economy or anything in between, but either way it's more than 5%. I could have guessed that without looking it up.

Please note: £7 billion Business Rates divided by £406 billion sales = 1.7p for each £1 of sales on average or about one-tenth as much as the VAT thereon.

"Based on ONS data, immigration has put English house prices up by 20% over the last 25 years"

I must admit that I have downplayed the impact of immigration on house prices and rents, clearly, it must have had some impact. AFAIAC, it's just a population increase. As we well know, even at pathetic modern UK house building rates, supply has more than kept pace with demand. The real reason is the phasing out of Georgism Lite.

Via FullFact, who link to the ONS press release concerned:

Immigration has contributed 21% towards house price growth in England, according to analysis by the Ministry of Housing, Communities and Local Government. But MHCLG also says the data doesn’t provide a complete answer and should be used cautiously. It found that income growth is the biggest driver of increased house prices.

English house prices have risen by 320% on average over this period... When factoring in inflation, according to the Consumer Price Index, the increase amounts to 137%.

People still throw this in my face when I try to explain about Georgism Lite. One cretin on Twitter linked back to the ONS figure and said, there, that proves it, it's all down to immigration.

I asked him, OK, even if the 20% figure is correct (it does seem plausible - even though FullFact do their usual and point to other research showing the impact was negligible or even negative at local level), how do you explain the other bloody 300% or 117% or however much can't be explained by immigration/population increases?

* Deafening silence*

Innumerate fuckwits of the week.

From the Evening Standard, friend of rent seekers everywhere:

40 cab firms go out of business just months after 5,000% rise in fees

1. There are 2,400 cab firms in London, as the TfL lady says, 40 shutting down in a few months is not statistically significant.

2. The 5,000% rise is nonsense. The point is, TfL put the fees up from a token amount to 'real money' (average about £100 per car/driver per year, it would seem).The percentage increase is irrelevant if the starting figure is tiny.

3. TfL's new system is fundamentally flawed of course. The charge per year per cab/driver seems way too high as it can all be automated. Worse than that, they have a banding system:

Those with between 101 and 500 cars will see their licence fee leap by 5,200 per cent from £2,826 to what the LPHCA calls an “extortionate” £150,000. Operators with between 501 and 1,000 cars could see their bill jump from £2,826 to £350,000 over five years.

Clearly, if you are running exactly 500 cabs, the average cost per cab/driver is £60/year, chump change. But increase that to 501 and the average cost is £140, which is clearly a barrier to growth, and will encourage businesses to merge into larger entities which are just below the upper limits, or for businesses which are just above the limit to scale back. See the example of Greyhound cars in the article.

What's wrong with a flat annual charge per cab/driver? That's what the cab people should be campaigning for, not against charges in general. As I explained before, divide £100 per cab/driver per year by thousands of journeys per year, and the added cost per journey is a few pence.

4. A TfL spokeswoman said... the fee rises were “proportionate” after a dramatic rise in the size of the industry over the last five years had greatly increased the costs of overseeing them. The fees will fund extra compliance officers “who do a crucial job in driving up standards and ensuring passengers remain safe”

That's bollocks. For sure, TfL's costs double if the number of cabs doubles, but the cost per cab is unaffected. Is that really the best justification that this multi billion turnover organisation has dreamed up over the past few months?

Killer Arguments Against LVT, Not (431)

Arch-Tory/NIMBY Nicholas Clarke on Twitter @drmagwai

And what you fail to mention is that lvt only works properly when all land is already developed. Do we want the UK to become a mega city?

This is the sort of baseless crap that we have to deal with.

I remember that Sobers (I think it was him) once advanced the argument that LVT would only work for an agricultural economy, also without justification or explanation.

As per usual, we are presented with two baseless arguments which cancel each other out.

Let's take a breath and do facts and logic:

1. Most of the UK by surface area is 'developed'. Up to one-tenth is actually built on (incl. roads, reservoirs, back gardens etc) and most of the rest has been 'developed' or adapted for farming and some bits have been kept close to pristine for tourism, leisure, wildlife etc.

2. Even if both arguments, taken in isolation had some validity (which they don't), then it would be quite easy to split up the UK (or any similar country) into two regions - the urban bits (where LVT would work properly, even by Nimby Clarke's own admission) and the remaining rural area (where LVT would work fine by Sobers' admission).

3. The UK is not going to become a mega city any time soon - with or without LVT - it would require a twenty-fold increase in population to about one billion to make it worthwhile. So that is the stupidest rhetorical question of the day.

More VAT-Brexit-related fuckwittery

From The Guardian:

More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday.

The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy.

Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area...

This is a typical spat between incompetent government and hard-core Bremoaners, with long-suffering UK businesses caught in the crossfire.

VAT is the most damaging tax, but all the same, it can be made administratively as painless as possible. Before wading in, it is important to know how it currently works on a day-to-day level. When a UK VAT-able business imports from the EU, VAT is nominally due, but it is not paid up-front - what happens is that the notional import VAT is added to the total VAT payable on the next VAT-return, but the importer can also reclaim the notional import VAT is input tax, so the overall payment is nothing.

This defers the business' cash outflow by a few weeks or months - the apparent proposed new system is to collect VAT at point/time of import (a massive administrative burden) and not to credit it as input VAT until the next return (usually quarterly).

There is nothing to stop the UK government from continuing current practice post-Brexit (in fact, we could do this for most import duties). And despite what 'Labour and Tory MPs' have said, there is absolutely no need for the UK to remain in the Customs Union or the Eu-VAT area to be able to do this - remember that post-Brexit, it is entirely up to the UK government whether or not it imposes import duties, import VAT or even VAT at all.

Read it and weep

From The Daily Mail:

Last orders for the traditional boozer? A third of British pubs have now closed since the 1970s thanks to rising business rates and beer taxes...

Yes, it is very sad, but it was the smoking ban wot dunnit, as a pub landlord tries to explain in the comments (and is roundly shouted down).

It's not the beer duty (42p per pint) it is the VAT - one-sixth of the average price of pint £3.60 is 60p. That's more than the beer duty FFS. If a pint of canned in the supermarket costs £1, the beer duty is also 42p but the VAT is only 17p. That's what makes the difference.

It's not the business rates either, here's some total fuckwittery from The Daily Star:

A massive 19% rise in business rates is set to hit 17,000 pubs across the UK – forcing them to whack a 5p price rise on each beer.

A pub can't pass on a property tax or rent anyway but what are the numbers..?

From The British Beer & Pub Association:

Pubs and bars pay 2.8 per cent of total business rates, yet account for just 0.5 per cent of total business turnover.

OK, that means about £800 million in Business Rates each year. But what's their total turnover..? The Morning Advertiser says it's £22 billion.

So the 0.5% is complete shite, multiply £22 billion by 200 and that means UK "total business turnover" is £4.4 trillion, two or three times total GDP.

Divide £800 million rates by £22 billion turnover, that's 3.6% of turnover, about 13p per pint. A quarter of the VAT and one third of the beer duty. Pretty much naff all in other words.

If Rates bills increase by 19% (no reason to assume this is true, but let's run with it), that means 2.5p more per pint, not 5p. But nice try.

As ever, you wonder, are these people corrupt or stupid? At least Tim Martin bangs on about VAT and troubles himself less with beer duty and Business Rates.

There is none as stupid as the one who refuses to learn.

From the BBC:

"[Former finance minister Alistair Darling] said banks today were much better capitalised than in 2007 and regulators "more sharp and ready to intervene".

But he warned the next crisis was likely to come from "somewhere unexpected and from causes that haven't yet been identified".

"The biggest danger is complacency. And of course in a few years' time when institutional memories start to fade, and the people around have all gone and retired, then that's where the risk occurs."

There's no mystery at all, financial crises are caused by leveraged land speculation (or speculating in some other monopoly right or natural resource).

Doesn't everybody know this?

We can argue about how reliable the 18-year cycle is, or draw up a short-ish list of things other than land which have been behind certain credit bubbles, but that's just details.

All this "regulation" won't make the slightest bit of difference, banks' own capital was so dwindlingly small last time, it doesn't matter whether they've doubled it or trebled it, it is still dwindlingly small.

Killer Arguments Against LVT, Not (406)

Emailed in by Physiocrat, from the comments in an article on FT Adviser headed "The pound’s longer, sharper Brexit shock":

Paris azawak said:

@ Physiocrat @ RiskAdjustedReturn

I have attempted to follow this bizarre thread in which Physiocrat puts forward an ultra-liberalist hypothesis in which all taxes would be abolished overnight except for a simple land tax…

This is his first Big Mistake, as Mike W points out in the comments:

I only require that the 'last great project of political economy' (actual phrase which caused the problem), itself conforms to Popper's dictum of 'piecemeal' observable, testable, one bit at a time, implementation. With no bloody revolution or bloody reactionary counter thrust.

But let's read the rest of the drivel anyway, just for fun:

… Would this not simply result in a return to the known ills of completely unbridled capitalism:

(i) the brutal, irresponsible chaos of disproportionately concentrated wealth into the hands of an increasingly small number (a proliferation of Murdochs, Gates, post-soviet oligarchs, etc, behaving like capricious feudal barons as the rest struggle as vassals once did);

(ii) an immediate widening of the disparity between rich and poor (ie the rich get richer and richer, the poor get poorer and fall behind, are excluded, abusively "exploited", resulting in a surge in social decay and moral injustice (refer Dickens) which costs far more to cure than to prevent (exclusion, poverty, declining health, homelessness, poor education, exclusion, discrimination, delinquent behaviour, crime, &c);

(iii) the decline of infrastructures (especially less "profitable" ones) that taxes pay for in response to specific needs and situations as they evolve and in accordance with government policy as they develop according to evolving democratic majority choices in the interest of the common good.

No company or person enjoys paying taxes.

However, what taxpayers get in return for their fleeting contribute is a very great deal more in return than the sums they contribute since they benefit from the vast heritage or legacy of all that has been constructed and developed by decade upon decade of taxpayers (heath sector, educational sector, law and order, transport and communications, government and public buildings ... the list is endless).

The only possible way to levy tax fairly in order to maintain and develop the vast EU wide infrastructures that make the existence of dynamic, modern and efficient trade, services and consumer markets possible is good governance, fair regulation and taxation based on means-testing.

A land tax is haphazard by comparison and relatively easy to distort and circumnavigate (eg as pointed out, foreign companies such as Google generate unprecedented wealth without owning physical land in the markets they derive profits from through a virtual, immediate and monopolistic electronic Platform).

For the same reason, VAT is relatively unfair since it is a flat tax on consumption regardless of means. The poor pay the same VAT as the rich for the product.

Tax should be levied on income/revenue and not exclusively on land ownership as suggested, because

(a) land value varies constantly according to market fluctuation and is impossible to estimate exactly

(b) in an imperfect world [income tax] is:
(i) means-tested;
(ii) proportionate and therefore sustainable;
(iii) supportive of the market whose infrastructure has made its generation possible;
(iv) adaptable according to specific and ever-evolving governmental policies aimed to protect society in the interest of the common good, and so as to avoid the higher social and Financial cost of exclusion and social decay;
(v) ethical, civilizing and therefore progressive,

A land tax would be regressive and mark a return to the Dark Age:

Indeed, history teaches us that in the middle ages, land taxes concentrated power and wealth into increasingly power dynasties who possessed entire fiefdoms and kingdoms; charity was dispensed patronisingly and randomly according to whim or the success of petitioning peasants and vassals.

Not much means-testing there. Just medieval madness, machiavellan machination and civil strife all round (refer Shakespeare).

RiskAdjustedReturn is entirely correct above, it seems to me when he state in a post above that:
"Someone has to pay for the infrastructure that makes the building viable for habitation."

Well that settles it then, doesn't it?

Killer Arguments Against LVT, Not (388)

Via Carol Wilcox, from the FT readers' letters:

Mr Wolf suggests raising “green” taxes and taxes on economic rents (mainly land). These may be efficient or worthy in themselves, but by their very nature they are not particularly “elastic” to economic activity: in rate of revenue increase they are less than proportional to gross domestic product. In this regard they suffer from the same vice as the tax and benefit changes that cut reservation wages, generated the compositional change in employment, and held back revenue growth.

Michael Kuczynski, Pembroke College, Cambridge.

WTF. Rents are actually more than elastic to economic activity, in the absence of government measures to reduce or increase the amounts going to rent, the natural tendency is for rents to increase as a share of GDP when the economy grows and vice versa.

LVT and other taxes on rents do not cut reservation wages by one penny; by stimulating the economy, however slightly, they increase them.

Taxes on output and earnings depress and distort the composition of employment, unlike LVT, which is entirely neutral.

And given that only one-tenth of the UK's total tax revenues are taxes on rents (Council Tax, Business Rates, Fuel Duty) collecting one-quarter of economic rents, there is plenty of scope to increase them, with a double-plus boost if taxes on output and employment are reduced in step.

The endless riddles of Home-Owner-ist logic...

From The Telegraph, two days ago:

Landlords will sell 500,000 properties in the next 12 months, according to new research from buy-to-let investor trade body the National Landlords Association (NLA)...

The sudden pessimism follows George Osborne’s double-whammy tax attack on the sector. In his July Budget he announced the removal of landlords' mortgage interest tax relief which, when fully implemented in 2020-21, will mean some landlords pay tax on zero income or even on losses. And in November he announced that landlords would pay a 3pc stamp duty surcharge, coming in from this April...

Many also predict that rents will rise as landlords seek to pass on the costs.

Fair enough, that was the whole point (allegedly) - to try and get owner-occupation levels going up again which of necessity means landlords leaving the market i.e. selling (as we saw between 1945 and the 1980s). Of course rents won't rise one penny, firstly landlords can't pass on costs, and secondly if there really were a sell-off of any magnitude, it would be higher earning tenants who buy them and become owner-ocupiers, pushing down the average incomes of remaining tenants and hence average rents.

So how bad is that sudden pessimism..?

From The Telegraph, today:

House price growth has hit a 17 month-high, as the supply of new properties being put up for sale tightens. UK house prices rose 9.7pc in the year to January, up from 9.5pc a month earlier, according to the Halifax. This is the biggest jump since in July 2014, when prices rose by more than 10pc...

Some experts believe the housing market is being lifted in the short term by buy-to-let investors looking to make a purchase before the sector is hit with a rise in stamp duty in April.

Not that terrible then, if they are still piling in, eh?

Or do the Homeys genuinely believe that landlords who are piling in now will sell them off again after 6 April 2016? Why would they do that?

Feeble arguments for staying in the EU.

Baldilocks, in The Telegraph:

For me, there will be two other major factors, which have not yet featured much in the early jousting ahead of the referendum, but which cannot be ignored.

One is that, amid all the clumsy bureaucracy and failed ideas, the EU has provided the structure and the standards for new democracies across central Europe to establish themselves after their many decades of tyranny and tragedy... We still need the EU to provide the safe harbour for the docking of fragile democracies, and it would be strange to champion that idea but abandon it ourselves.

This is true actually, if we gloss over the time lag between independence from the USSR (1991) and joining the EU (2004 or 2007) which suggests there is little or no link at all. Leaders of 'new' democracies in eastern Europe seemed to be pretty keen for their countries to become member states of the EU, and the EU in turn demanded certain reforms vis a vis corruption before they were allowed in, and so on. See also Turkey.

All good stuff, but those countries could not give a hoot whether the UK remains a member state or not, and it appears unlikely that the people in the UK are keen for the UK to open its borders to them. So on balance, that's still an argument for leaving.

The second factor is a related one: whatever the shortcomings of the European “project” it is manifestly not in our interests for either it or the United Kingdom to fall apart. Such will be the challenges to the western world in the coming years, from a turbulent Middle East and a volatile world economy, that the dismembering of our own country by nationalists or the breaking up of Europe into uncontrolled rivalry would make many dangers more threatening still.

What 'uncontrolled rivalry'? He is hallucinating. Each country's interests are what they are (although Merkel seems to have lost the plot and is acting counter to the interests of the German general public) whether they are member states of the EU or not.

If this 'uncontrolled rivalry' is fought out between large countries at EU level, it can then be imposed on all the other member states. Without the EU, would one country be able to force another country to set maximum working hours, to grant asylum to terroristsrefugees or pay welfare benefits to foreigners? Methinks not.

And by and large, western European countries have many more common interests than ones which divide them, in particular security. Which is why most are members of NATO, for example. Or free trade, which is perfectly possible without the EU.

So again, that's more of an argument for leaving.

There is no doubt that without the United Kingdom, the EU would be weaker. It would lose the fifth largest economy of the world, the continent’s greatest centre of finance, and one of its only two respected military powers. We will have to ask, disliking so many aspects of it as we do, whether we really want to weaken it…

Wot? It is highly unlikely that the other member states would dissolve the EU if we left, so he's talking crap. And if us leaving somehow triggered its dissolution, then that means we did the right thing. Yet another argument for leaving.

… and at the same time increase the chances, if the UK left the EU, of Scotland leaving the UK. Scottish nationalists would jump at the chance to reverse the argument of last year’s referendum – now it would be them saying they would stay in Europe without us. They would have the pretext for their second referendum, and the result of it could well be too close to call.

I see no harm in Scotland having another independence referendum every ten or twenty years, fair's fair, and personally I am not bothered whether the Scots want to remain members of the UK or not. I live in England and it is none of my business. But Scotland is an entirely separate topic so a non-argument in this context.

To end up destroying the United Kingdom and gravely weakening the European Union would not be a very clever day’s work.

He sure talks some shit. The UK would be no more 'destroyed' if Scotland, barely one-tenth of the whole, became independent than it was 'destroyed' when the most of Ireland become a separate country, or Czechoslovakia was 'destroyed' when it was demerged into Czech Republic and Slovakia, two countries which are doing fine and still co-operate quite closely in many ways.

Would the epically corrupt Hague really spend the rest of his life campaigning for Scotland to rejoin the UK? Has he ever pleaded with Ireland to rejoin the UK or with the two Czechoslovak successor countries to merge again, and can he explain why they should? Would he campaign for the UK to become a member state of the EU if it wasn't one already? More epic fails and non-arguments.

Crass exaggeration and hyperbole does not amount to an argument, you self-pitying bald fucker. Having thought about your arguments while writing this post, I now look upon Brexit even more favourably than I did this morning.

No, this is not "creative accounting".

Simple question: if you remortgage at a lower interest rate, does your annual cost go down?

A: of course if does. So by definition, your annual surplus goes up (or your annual net loss goes down).

It is the same with QE. The government refinanced £350 bn of interest-bearing debt by replacing it with £350 bn* of QE money which costs it 0.5% interest.

If the government's interest costs go down**, then that reduces the deficit.

* Let us assume, for simplicity, that the £350 bn old debt was not bought redeemed at a premium i.e. £350 bn nominal of high interest debt was bought back for £375 bn or something.

** There is a good argument and plenty of evidence to show that governments don't need to pay interest at all, separate topic. But 0.5% is pretty close to zero.

It is a mystery to me why 'financial journalists' find this so difficult to understand and pretend it is more complicated than it is.

From yesterday's Evening Standard:

The Chancellor is also going to get a handy leg-up from Robert Chote’s watchdog on the public finances over the next few years — cutting his borrowing bill with the wave of a magic wand.

How so? It all comes about through the change in the OBR’s assumption about the Bank of England’s Asset Purchase Facility (APF), the vehicle in which Threadneedle Street holds the £375 billion of government bonds it bought under its money-printing programme.

"Osborne will paint this as fiscal rectitude, when he’s being rewarded for economic failure." [says] Russell Lynch.

Explaining the mechanics of this without needing to put a wet towel over your head is difficult, but here’s the gist of it.

All those bonds bought by the Bank under quantitative easing (QE) rack up “coupon” or interest payments from the Government — say of between 2% and 2.5% — most of which is now transferred back to the Treasury, after the Chancellor changed the rules a couple of years back***. But the Bank bought the bonds with the newly created QE money on which it pays interest set at Bank rate, which is just 0.5%.

Broadly, the difference between the two rates is now returned to the Treasury. The details of these arcane transactions have been relegated to supplemental fiscal tables in recent publications and this transfer —which looks like very (ahem) “creative” accounting — gets much less attention. But it has a big impact. For example, this financial year, the APF is forecast to generate £14.1 billion in coupon payments less £2 billion in interest paid out on the QE cash — £12.1 billion.

The "creative accounting" is pretending that the original bonds still exist and making two sub-departments of HM Treasury pay interest to each other, but such is life.

*** Not clear how the rules would ever have been any different. Governments pay interest on their bonds. The holder of the bonds receive the interest. If the UK government holds German bonds, the German government pays the UK government interest. If the UK government holds UK government bonds, it pays itself interest i.e. nothing happens.

More gloriously vacuous pro-EU waffle.

From this morning's City AM readers' letters:


RE: Don't be stupid: The US won't cut off Britain post-Brexit, Monday

I get the impression that Eurosceptics live in an Alice in Wonderland world of wishful thinking.

As soon as Britain breaks free of the EU, they seem to assume that China, India and the US will be beating a path to our door, begging for the world to be run by Britain once again, unshackled by the realities of economic and military decline.

If the UK wants to lead the world, the government should first try working with our neighbours and British businesses should try exporting good products and stop selling off our companies at every opportunity.

The rest is just fantasy.

Joseph Paul.

I am baffled. Not only is none of that true, the article to which he refers was written by a gloriously cynical American who says that US politicians aren't really bothered either way.

And as per usual for a pro-EU person, he doesn't bother advancing a single argument for staying in. C'mon guys, there must be a few things you can mention. Surely?

Pro-EU MPs are really scraping the barrel.

From The Evening Standard:

Pro-Europe MPs served the threat of a pricier pint a day after Tory eurosceptics claimed that chicken tikka masala would taste better in an independent UK.

Lucy Thomas, from Britain Stronger in Europe, said: “The cost of everyday items is lower in London because of the EU. Trading freely across Europe means cheaper goods and services ... whether you’re buying a pint or booking a flight. If we left Europe then UK pubs may have to pay a higher tariff to buy in beer from France, Belgium, or Germany. Let’s make sure we avoid that hangover.”

However, Tory MP Paul Scully scorned the claim. He said: “I don’t see us losing access to the single market because European brewers will still want to export their beers. Competition would keep prices low and restaurants and pubs could knock off the cost of EU red tape, which would be something to celebrate.”

Above and beyond that, (nearly) half the cost of a pint in the pub is Beer Duty and VAT, which an independent Britain would be able to increase or reduce to suit itself. The actual price of beer ex-duty is almost irrelevant. And there are plenty of bansturbators who want beer to cost more anyway, so from their point of view, a price rise would be A Good Thing.

I mean, there are some legitimate arguments for staying in the EU (but I'm not giving them away and there are more and better arguments for leaving), so why do they have to stoop to such crap? It does suggest that they can't think of any.

"The charter would legally prevent future governments from…"

The most important rule in the UK constitution is that a Parliament cannot bind future Parliaments. This government can pass whatever laws it likes and future governments can repeal and replace every last one of them.

So this bullshit started off under New Labour with legally binding carbon budgets and Boy George is trying the same stupid trick with the Charter for Budget Responsibility which would legally prevent future governments from spending more than they receive in tax revenue when the economy is growing.

This is so vague as to be a meaningless and reminds us of yet more New Labour bullshit, the Golden Rule. It also reminds us that even though the Tories insist that the economy is recovering/growing, they are spending money like a drunken sailor who knows he is terminally ill and who has just won the lottery while on shore leave.

So the only reason to vote for this - if you could overcome your inner pedant - would be that as soon as it receives Royal Assent, you could have the entire Tory cabinet arrested for breaking the law.

Which raises the next question, does the Charter actually say what the penalties are if a future government does not comply with the law or tries to repeal it..?

Simon Walker: Chairman of the Institute of Rent Seeking Parasites,

From an article entitled "Entrepreneurs will reap the rewards of business rates change", Simon Walker, Top C**t at the Institute of Directors writes, "Ask a small business what bothers them most on a daily basis, and it won’t be long before they raise the dreaded spectre of business rates. For many small businesses, it’s of more concern than corporation tax (a tax on companies’ profits the rate of which depends on the amount of profit)."

This is the Poor Widows in Mansions argument, but even more pathetic as it's made in defense of businesses clinging to the security blanket of imputed rent.

Firstly Walker ignores that taxing profit IS the tax on business. The better you are at making a profit, the more you get penalised for doing so. Walker appears to think this is fair compared to paying the fixed cost of rent.

Secondly, even Walker must know his point is only relevant to owner occupiers. It makes no odds to tenants if they are sweating over paying their rent to a private landlord or the Council. Yet, Top C**t Walker chooses to gloss over that pretty important point.

Thirdly, Walker chooses to ignore the role of rent in allocating valuable location and fixed capital. Rent is the market's way of saying, that one Capitalist is prepared to pay X amount to exclude others from using those resources.

If  businesses are sweating if they can pay the rent or not, this shows the market is working as it should. Efficiently.  If they cannot turn a profit and lose that premises to someone else, that is a GOOD THING.

It's truly ironic that a Lefty like Carol Wilcox at the Labour Land Campaign is more of a hardcore capitalist than the IoD and TaxPayers Alliance.

In their joint policy document cited by Walker in the article " 2020 Tax Commission" they recommend scrapping  property taxes in favour of locally collected sales taxes.

Why? Because they do not want competition. Paying Business Rates puts owner occupiers in direct competition with renters. VAT provides a barrier to entry for small businesses.

The members of the IoD and Chambers of Commerce don't care if this shrinks GDP. It protects their shareholders interests and their place on the board.

For Walker to invoke entrepreneurism as the beneficiary for cuts to UBR is sickening. It's no good blaming the politicians. They just do whatever the fake-Capitalists tell them to.

Killer Arguments Against LVT, Not (369)

Benj did his best with this twat over at the ASI, but here goes:

...now that we’re on the subject, I don’t agree with the claim that [LVT] is non-distortionary. It implies that storing your stuff in a stack 100 m high and 1 metre square horizontally is economically a more efficient way to do business than storing it in a box 5x5x4 metres. Why?

Nobody said anything of the sort. Out in most industrial estates in the real world, buildings are usually only one or two storeys high because they are cheaper to build and more convenient to use. Because land out there is cheap, so it doesn't matter if you use a lot of it. If you (for some bizarre reason) wanted to have a warehouse in central London where land is expensive, it is worthwhile building up into the sky and digging down into the ground. The extra construction and running  costs are, hopefully, a less than the extra you pay for the land.

An LVT pushes the economy away from business applications that require a lot of land and towards those applications that require none, compared to the situation that would arise if there were no taxes.

That shows straight away that he knows fuck all about land values. Farmers would pay little or nothing for the three-quarters of land which is farmed, because farm land has a very low rental value (per acre). Manufacturers at the edge of town who require large amounts of space would also pay relatively little because land at the edge of town is relatively cheap. High street retailers and offices, who require little actual surface area, will be in the centre of town, where land is very expensive.

Ultimately, if ramped up high enough (always a good trick if you want to see what’s wrong with an idea)...

But then that's not Land Value Tax. We might as well argue against income tax on the basis that the government could ramp it up to over 100%.

... it would result in most land being deemed worthless and left unused (a land value tax presumably collects no tax on land that has no value) as all those applications that cannot make enough per acre to pay the tax go out of business, and those that can expand only up to the point where they can meet demand at the higher price.

LVT is just like renting from the government, or having an interest-only, non-repayable, non-recourse mortgage on your land. If the government were so stupid as to choke off its main source of income by demanding above-market rents or 1,000% interest, well, that problem is not inherent in LVT. And clearly he does not understand the rent-setting process or the difference between rental values and selling prices.

And if you avoid that problem...

Which is only a problem in this idiot's fevered imagination.

... by taxing it all at a flat rate, and insisting that every square foot of land must be owned by somebody, then you’ll likely find the price of land going negative, with people paying you to take it off their hands.

That is the stupidest idea ever, hardly a surprise coming from this person.

The difference in rental values between urban/developed land and farmland is about 1,000:1 and the difference between the most desirable and most marginal urban/developed land/locations is also about 1,000:1.

Meaningless statistic of the week: "Half of households receive more in benefits than they pay in taxes"

The Torygraph dutifully trots out the misleading headline:

The Office for National Statistics reveals that more than 13 million households in Britain receive more in benefits than they pay in taxes

Accompanied by a picture of celebrity welfare claimant and Torygraph hate figure Dee White.

We knew this anyway: there are approx. thirteen million workless households (eight million pensioner households and five million working age households). They all get much more out than they pay in, duh. We could add on a significant chunk of public sector households as well.

But let's read on a bit...

However the figures from the ONS demonstrate the scale of the welfare state in Britain.

The average household pays £13,402 in taxes and receives £12,940 in benefits, which include both cash payments such as tax credits and benefits-in-kind such as the cost of education and the health service. The poorest fifth of households receive £14,868 in benefits but pay just £4,886 in tax.

No, the average working household pays/generates more like £40,000 in taxes (£600 bn divided by 15 million), I assume they are cheerfully omitting most taxes and just looking at income tax and Employee's NIC.

The £12,940 figure looks just about plausible, if you include all households i.e. £27 million x £13k = £350 billion = cash pensions and welfare spending + NHS + education.

If the average household were to get as much out as they pay in, isn't that a sign that the government is working efficiently? If you compare the more accurate £40,000 with £12,940, that highlights how inefficient it is.

Further, if it were true that the poorest fifth of households get £10,000 more out than they pay in, that equates to about £50 billion a year, three per cent of GDP and nothing to worry about, really.

Then there's this bit of gibberish at the end:

Britain currently spends £125billion a year on working age benefits. Over the last Parliament the government achieved £15billion worth of cuts but Mr Osborne is now pushing ahead with £12billion worth of cuts in just two years.

Direct cash benefits to working age households are much less than that, about £80 billion from memory. If you are consistent and add on the education budget and the cost of the one-half of NHS services 'consumed' by working age households, maybe you are closer to £200 billion.

Minus off the not unreasonable £50 billion extra going to people at the bottom and that leaves the working age population with a tax bill of £600 billion and net benefits of £150 billion, which looks a pretty fucking appalling return to me. That's one-quarter of what you pay in.
I bet the comments section is a hoot.

"Charity cash could go to Transport for London"

From City AM:

MAYORAL candidate Ivan Massow wants £75m of surplus charity money to be put towards a fund devoted to improving mobility in the capital, he told City A.M.

London charities are holding £100m money that has been left unspent for more than two years. Massow believes 75 per cent of it could be used as an endowment to fund Oyster cards for low-income Londoners.

“It’s all about mobility. They have the remit to distribute, in any way they see fit.” he said, "It means everything from getting kids to school to getting their parents to work. The fund’s short-term target is to raise £50m and this would more than clear that.”