A couple more pathetic attempts to get money pouring back into the Great British Ponzi Scheme (from para 1.121 of HM Treasury's Budget Summary):
The Budget provides help for homeowners and new buyers, and supports the capacity of the house-building industry to ensure a more efficient housing market:
i. the Government will help homeowners facing difficulties by extending for a further year temporary changes to the Support for Mortgage Interest (SMI) scheme. The 13-week waiting period and £200,000 limit on eligible mortgage capital will now remain in force for new working age SMI claimants until January 2013;
ii. the Government will provide £250 million to support first time buyers to purchase a new-build property. The FirstBuy programme will assist over 10,000 households with equity investments jointly funded with house-builders; and
iii. the Government will strengthen demand for residential property by reforming the stamp duty land tax rules applied to bulk purchases. This will reduce a barrier to investment in residential property, promoting private rented housing supply.
Or if you want that in English:
i. Let's cut benefits for the grubby horrible unemployed people in council housing and increase benefits for lovely clean unemployed people who have "jumped on the housing ladder", even if they are hopelessly over-mortgaged! The priced-out generation won't begrudge paying a bit of extra tax to make sure they stay priced out!
ii. We looked at this one yesterday. Pointless. They need to increase the number of first time buyers by over 300,000 a year if they want to keep the house price bubble going.
And any sane or rational person would understand the words "support the capacity of the house-building industry to ensure a more efficient housing market" to mean "allow supply to rise to meet demand" but as the Lib-Cons are sticking to their guns to prevent "garden grabbing", to "preserve The Hallowed Green Belt" and reduce new home building to zero if at all possible, that is not what they mean at all. In other words, they mean precisely f- all.
iii. SDLT is, taken in isolation, a shit tax, and the new way of determining the rate is 'fairer' or at least more rational (and leads to a lower rate). But as the more detailed notes (page A112 of this) explain: "Economic impact: The reduction in the effective tax rate should stimulate demand and lead to additional transactions. Capitalisation of the tax cut may* increase the price for this type of transaction."
And isn't Home-Owner-Ism supposed to at least pretend to be about increasing the number of owner-occupiers? They appear to openly admit that it's really about helping landlords (and vendors) and protecting banks against house price falls.
* For 'may' substitute 'will'. UPDATE: if you are a fat bigot, for 'may' substitute 'might' and then for 'might' substitute 'will'.
Meh
3 hours ago
13 comments:
How Osbourne et al resist the urge to get ditch all this crap is a mystery to me, he must have tremendous willpower.
I'd have reduced the tax code to a single page (with or without Georgism) and fired every quangocrat in the country by now, It's the Right Thing To Do.
CD, far too complicated.
It's a simple question of maths, but a higher personal allowance combined with a flat income tax at whatever rate will always benefit lower earners more than a lower personal allowance with 'progressive' rates of income tax. Combine this flat rate with the flat rate of corporation tax (the fourth least-bad tax we have).
Sod ISA allowances - they benefit mainly banks, and what's left over benefits mainly people with lots of savings. It's a highly regressive tax break - if you want poor people to save, then end means-testing (gets rid of loads of bureaucrats to boot).
0.5% LVT is too wimpy - that works out at even less than Council Tax. 1% flat tax on value of homes is the way to start, which they already have in Northern Ireland instead of Council Tax.
"Capitalisation of the tax cut may* increase the price for this type of transaction."...
* For 'may' substitute 'will'.
No.
For 'may' substitute 'might' so that it is then a comprehensible sentence, and then substitute 'will'.
lol, quite. The rules could still be simplified to a few sentences even if we avoided doing something crazy like taxing all land values at 5% with no other taxes.
0.5% LVT would at least have the advantage of not imposing an upper limit like the council tax, so those living in mansions and castles end up paying a bit more into the pot while others pay less, also abandoned properties & land that currently avoids CT would make up for any shortfall. More importantly it wouldn't scare off the home-ownerists because it would look just like the council tax, so wouldn't create mass opposition.
But yes, 1% would be better.
You also didn't mention that point ii basically involves the government guaranteeing high LTV mortgages. So the poor sods who are "helped" by the new scheme will end up owing 95% of the declining value of their house. Especially as it applies to new build, the premium for which evaporates as soon as you've bought it.
TFB, point taken.
CD, fair enough, it's your Budget.
AC, I mentioned it yesterday and didn't want to get marked down for repetition.
Good point about new build premium, I forgot that, I'll stick it in yesterday's post.
Question which has come up recently during my lunchtime "researching" and musings:
How much of higher rate taxes are on salaries, interest etc... at 40% and how much is dividend at 32.5%?
SW, try here
http://www.hmrc.gov.uk/thelibrary/national-statistics.htm
"It's a simple question of maths, but a higher personal allowance combined with a flat income tax at whatever rate will always benefit lower earners more than a lower personal allowance with 'progressive' rates of income tax. Combine this flat rate with the flat rate of corporation tax (the fourth least-bad tax we have)."
I like to argue that it is more progressive to have a large personal allowance, welfare topup for earners below this threshold & flat rates of taxation than the current so-called progressive tax system we currently have in place which simply harms the economy as almost ALL taxes come from those paying on high incomes.
SW, try here
http://www.hmrc.gov.uk/thelibrary/national-statistics.htm
AAAAAAHHHHH how the hell do you find anything in there!!
SW, I posted that earlier reply too quickly.
Even better is taxing all incomes at same flat rate (say 35%) without a personal allowance and giving everybody a Citizen's Income of (say) £3,500 a year, with the option to convert that to tax credits of £3,500 -> effective personal allowance of £10,000.
NB, this is not some some pie-in-the-sky idea - if you take normal welfare, Stat. Maternity Pay, student grants, the value of the personal allowance, Tax Credits, tax breaks for pensions etc. then a flat Citizen's Income of £70 a week is actually cheaper.
Effective income tax rates average out at about 50% (including VAT), so anything lower than that is a bonus.
To pre-empt AC1, the ideal rate is 0% income tax/VAT and just collect Land Value Tax.
7% PVT (discounted by rebuilding insurance cost)
7% Patent and copyright tax (Owner sets cost to be applied @ 7%, can be bought out at that cost).
1% Bank Risked Asset tax (i.e. What's not put in the BoE for reserve).
no other taxes.
HOI is a nice way to get people to wake up to the central truth.
That all the budget is doing is handing more rents to banks, not the home owner. HOI's are merely the middle man serfs.
Don't forget that the ultimate beneficiary are banks. Who own more natural assets now than any aristocratic landlord class in history, even kings and romans.
Interest on a mortgage is not interest. It is rent.
So bBanks now run this country. They are the government. De facto.
We either bow down to them or behead them.
The sooner we realise this and admit it(for some reason even we here are too scared of these simple observed fact to say it directly) then sooner we can move on to a better life.
Post a Comment