From Counting Cats
Well Doh! No shit Sherlock!! etc etc. We Kitty Counters could have told them that for virtually nothing. If you hand over large amounts of our cash direct to corrupt foreign Governments, all you are doing is topping up the regime and its cronies bank accounts, and providing the readies for their wives and families to go on a spending spree in Paris, London and New York. It does nothing for poor peasants whatsoever.
I actually think it's worse than that.
If you look at the sources of democracy, it's when there's a shift in power between the state and the people. Typically, industrialisation, when people gain wealth that isn't based around land. So, giving money to states works against that. It gives the state more power against their people.
If you want to help people, you'd do better to just release £10 notes from an aircraft at height. Or to work on opening up trade with countries, so that you put money into the pockets of the workers.
Friday, 31 October 2014
From Counting Cats
The rent-seekers have decided to keep up their attack on Air Passenger Duty, with the Faux Libs at City AM are happily regurgitating as Gospel truth:
The annual £3bn APD take is significant, but robust evidence now exists which highlights that a reduction to the tax would be revenue neutral. Independent PwC research has shown that scrapping the tax would stimulate the creation of 60,000 jobs and lead to £16bn in additional growth, and therefore be self-financing.
APD is first and foremost an economic matter. However, there is also a question of fairness that should be considered. We feel passionately that, for families and for ordinary travellers, the tax is regressive and damaging.
Families receive no “break” on child fares as they do for other goods and services, and a family of four now pays an average of £52 in APD to travel to short-haul destinations, and £284 for long-haul destinations.
We know that Heathrow and other London airports are running at full capacity, demand for slots vastly exceeds the availability and the airlines ration flights by bumping up prices accordingly. Their ticket prices have nothing to do with their actual costs, a large part of it is scarcity value i.e. rent.
So as long as the APD merely takes a chunk of the rent element of ticket prices, no harm done, it does not discourage activity or investment in the slightest. Or else those airports would not be running at full capacity, would they? The same does not necessarily apply to regional airports.
But that £3 billion figure does not reconcile with the headlines figures he bandies about ("£284 for long-haul desinations"). According to Wiki, there are 240 million passenger movements in the UK each year, i.e. 120 million get on a plane and 120 million get off. If APD were a straight per-passenger duty, it would be £25 per person per round trip.
A per passenger duty is a stupid idea of course, a per plane tax is better and the best designed tax would only claw back some of the rent element, so it would be set differently at different airports.
The rent element is highest at Heathrow and other London airports. Going by Wiki's figures, to raise £3 billion, all you would need is a £4,000 tax on each aircraft movement at Heathrow and (say) £2,000 at the other London airports (Gatwick, Stansted, Luton and City). Flights to or from any other UK airport would be completely tax free.
So a round trip to and from Heathrow, assuming average 150 passengers per plane, would work out at £53 per passenger (£4,000/150 x 2) per round trip. There is absolutely no need to distinguish between short and long haul flights, the value is in the slot, and if this encourages airlines to use Heathrow only for long-haul, well so much the better. (Further, aircraft noise is a nuisance, but why would you care whether the airliner roaring overhead is headed to Manchester or Manchuria?)
This would completely demolish their Faux Lib wailing, and they can chuck their stupid PwC 'research' in the bin. IF such a tax did have a negative impact on economic activity, then we can easily measure this - are these airports still running at full capacity? IF yes, then clearly the number of flights has not gone down, so the tax has had no negative impact. AND the chances are that other airports would move closer to full capacity.
Reality check: Heathrow airport charges the airlines about £20 per passenger (£40 per round trip) and this raises £1.5 billion income, double that and there's your £3 billion.
Thursday, 30 October 2014
Oh dear, those pesky facts and real life evidence from other countries getting in the way of blind prejudice again...
London Assembly Tory transport spokesman Richard Tracey said:
“Every year Londoners waste over 170 million hours sitting in traffic, costing London’s economy £4 billion. Many of these journeys in our city are unavoidable.
"But rather than hurting motorists with ridiculous charges and taxes, we should look at innovative ways to cut congestion and make traffic flow more smoothly. Turning off traffic lights at night, like they do in parts of Europe and North America, is one measure which would boost the economy and help the environment.”
There is "no obvious" link between tough laws and levels of illegal drug use, a government report has found.
Liberal Democrat Home Office minister Norman Baker said the report, comparing the UK with other countries, should end "mindless rhetoric" on drugs policy. He accused the Conservatives of "suppressing" the findings for months.
Prime Minister David Cameron said the research did not offer "specific conclusions" and said he did not "believe in" decriminalising drugs.
It strikes me that there are so many well-documented real life experiments in most things from so many different countries, there's little room for airy-fairy debates any more. It's just a question of choosing the ones with the best outcomes.
That goes for speed limits, traffic lights, education, the health, immigration, the tax and welfare systems, legalising/criminalising drugs and prostitution, you name it.
Banks are primarily balance sheet exercises. When they grant somebody a mortgage to buy land, they just 'split the zero' into an asset (the loan out) and a liability (the money which the vendor gets credited to his deposit account). This is about eighty per cent of all banks' assets and liabilities.
The banks then have to show that the value of their assets (mortgage principal) exceeds the value of their liabilities (all the deposits). As we will see, this is actually irrelevant.
(The banks then make real profits by charging mortgage borrowers more than they pay depositors. So really they are just being paid to act as debt collection/risk pooling agents for people who have sold land.)
Most mortgages are based on the borrower paying a fixed total amount in interest and repayments of principal for the next twenty-plus years. Once a loan has been granted, this is all that really matters to the borrower and this is all the bank really cares about as well.
So for example, you borrow £100,000 for 4% fixed over 25 years, your monthly repayments are £533. You get statements at the end of each year showing that the amount of principal is going down, which is nice, but pretty irrelevant. What really matters is how many more years to go.
But you can work backwards from the £533. It doesn't actually make any difference whether that is a £100,000 loan at 4%, a £75,000 loan at 6.9% or a £50,000 loan at 12.1%.
Which is why I can't take the whole concept of negative equity and the corresponding 'threat tio the health of the UK banking sector' seriously. Psychologically, it can't be a nice position to be in, and it only really matters if you want to move home (apparently a lot of banks allow you to 'port' negative equity anyway).
So if you have a £100,000 mortgage @ 4% on a home 'worth' only £75,000, all the bank would have to do is write the mortgage down to £75,000 and increase the interest rate to 6.9%. That's you out of nequity.
Although the bank's balance sheet would look a bit weird (liabilities now exceed assets), it doesn't actually make any difference to anything in the real world.
There was a throwaway sentence in yesterday's Metro suggesting that this was happening, but I assumed it was a typo. Turns out it's true.
From My Northwest
Among the balloons and flowers tied to the chain link fence outside Marysville-Pilchuck High School are these: a white wrestling shoe; a youth football team photo, with one player encased in a red-marker heart; and a candle covered with a plastic cup bearing the name "Jaylen."
They are all tributes to Jaylen Fryberg, the popular 15-year-old freshman who texted five friends to invite them to lunch Friday and then gunned them down at a table in the school's cafeteria…
Wednesday, 29 October 2014
About twenty years ago, I decided that photograph albums were boring. Even worse is having to feign interest when somebody shows you theirs.
(Since the advent of electronic cameras and mobile phones with cameras it has got far worse, because people don't come back with one or two rolls or film, they come back with hundreds of pictures which you are supposed to view on a tiny screen.)
But I had to do something with our first holiday snaps. So I stripped it down to the bare essentials - a few photos of me and Her Indoors, the train tickets, the receipt from the hotel, the entry tickets to a museum, the front page from the a gallery brochure, a couple of postcards etc - and put it all in a 40cm x 50cm clip frame. The rest got junked.
And I have kept going ever since and now have nearly a whole wall covered in these collages:
This has three main advantages.
1. It fills the original purpose of "keeping those treasured memories alive". You can look at pictures of your kids when they were small and cute etc.
2. If anybody asks where we went on holiday, I can just take down the frame and present it. If the person asking was just doing it out of politeness, they can pretend to look at the collage for thirty seconds or so, say something like "Ooh, that looks lovely." and pass it back with no offence meant and none taken. If they are really interested, because perhaps they have been to the same place or are considering going there, we can have a proper chat.
3. It cuts down on arguments over things like which year we went where, how many times we have flown with EasyJet, how many aquariums we ever have visited, whether we went somewhere for a long weekend or a whole week etc. All you have to to is go over to the wall (standing on the sideboard if necessary) and look.
From the BBC:
Badgers have lost a legal battle at the Court of Appeal against being culled. The Badgers' Association had accused the government of letting the latest pilot culls go ahead without an independent expert panel (IEP).
At a special late night session, the two badgers who had survived the journey from the West Country out of the seven who set off, asked three judges to rule there was a "legitimate expectation" that the expert monitors would be put in place.
But Lord Justice Davis, Lord Justice Christopher Clarke and Lord Justice Bean dismissed their case. They backed an earlier decision by the High Court that ministers had not broken rules in permitting a cull without scrutiny by an independent scientific panel.
The badgers were then taken out into the courtyard and shot,
From City AM:
Business groups have slammed politicians for failing to take action on energy supply shortages, despite 15 years of warning signs... Spare capacity will be close to four per cent, compared with around five per cent last year and 17 per cent three years ago.
Dan Lewis, energy policy adviser at the Institute of Directors, commented: “This has been in the offing for 15 years, and it really didn’t need to happen.” He called on the government to “start thinking hard about how to find renewable energy we can realistically integrate at a reasonable rate”
The acute lack of spare capacity is because a lot of perfectly good coal and oil fired power stations were forced to shut down in the last few years. Blaming it on not having enough "renewable energy" is completley bonkers. That's like giving your car away and explaining to your boss that you're late for work everyday because they haven't invented teleportation devices yet.
I used this circular argument in the comments here yesterday for a joke, but it appears that even relatively pro-market groups like the IoD can't see through it.
And what's this?
An energy department source told City A.M.: "Labour simply didn’t invest in the energy infrastructure we need. Under Labour, the energy system was creaking but we’re turning that around with £100bn investment and more than enough reserves this winter."
For sure, the government has to play a role in all this (pollution and safety standards, and without the government, the National Grid would never have happened, being a natural/land monopoly), but it doesn't need to invest a penny in power stations.
Isn't that what private companies are supposed to be doing? There's plenty of demand for electricity and it can be produced profitably provided the government doesn't interfere too much and taxes sensibly (i.e. on the natural monopoly element).
Preparations being put in place include plans to incentivise businesses to reduce energy demand. Lewis commented: “Now they are actually proposing to pay people not to work. It’s the last thing the economy needs.”
Tuesday, 28 October 2014
From The Evening Standard:
Fears that the UK is facing a winter of electricity blackouts were dismissed by the Government today.
Energy Minister Matt Hancock insisted the lights would stay on despite the country facing its biggest energy crunch in years.
But he accepted the need for emergency planning including potentially firing-up mothballed power stations or asking factories to close.
It came as a report from the National Grid revealed Britain may need the emergency measures if we are hit by extreme weather or an international energy crisis.
MBK emailed in the following snippet from this article:
MailOnline understands Jatindra Lad, 49, may have killed his wife Daksha, 44, and their two children, Trisha, 19, and Nisha, 16, before hanging himself. West Yorkshire Police have launched a murder investigation but said they are not looking for anybody else in relation to the deaths.
Worried friends and family who had not seen the family for 'some time' called the police who gained entry and found the bodies, which may have been there for days, the force said.
Officers are today guarding the £235,000 property in Blackberry Way, Clayton, while a forensics team gather evidence. The family, who moved to the area eight years ago, were 'lovely people' who had been celebrating Diwali at the weekend.
But they've managed to out-Daily Mail themselves. Several of the top rated comments were along the following lines
gilly1412: I honestly don't understand why DM feels the need to mention the value of people's houses the whole time?? What relevance does this have??
Bunbuns73: I think it is probably something along the lines of them thinking "oh their house was worth £250k therefore they were respectable and deserving of sympathy" or "oh their house was only worth £90k so they are obviously chavs from a rough area who deserved what they got".
I'm surprised they don't take the judgemental attitude a step further and tell us if people own their homes outright, are up to their eyeballs with a mortgage or da da daaaa - rent...
So true to form, the Daily Mail just edited the house price out of the article. It'd be a pity if they stopped doing it, that's half the fun.
From The Metro:
Professor Brian Cox has said that he is likely to be alone in the universe, and that there is no other intelligent life.
The TV physicist has claimed that the billion-year process that lead to his birth was likely to be a fluke, and it was improbable that the process had been recreated on Earth or any other planet.
He blames a number of ‘evolutionary bottlenecks’ for the absence of intelligent beings apart from himself, despite a huge number of them living in the solar system.
He made the startling claims in an episode of BBC’s Human Universe, adding: "There is only one advanced, technological, civilised person in this galaxy and there has only ever been one. That’s me, I am unique."
Monday, 27 October 2014
From the BBC
The responses to last fortnight's Fun Online Poll were as follows:
Which of the following will ultimately lead to the collapse of civilisation?
Islamic State - 21%
Russia-Ukraine conflict - 1%
Ebola - 3%
A giant meteorite - 17%
Other, please specify - 12%
Don't worry, we'll be fine - 46%
I'm with the 46% on this.
If are doomed anyway, there's no point worrying about it. Your best strategy is always to proceed on the basis that life will continue as normal.
From the BBC:
The UK has been told it must pay an extra £1.7bn (2.1bn euros) towards the European Union's budget because the economy has performed better than expected in recent years.
The payment follows new calculations by the EU that determine how much each member state should contribute.
It would add about a fifth to the UK's annual net contribution of £8.6bn.
How should the UK respond?
Vote here or use the widget in the sidebar.
Sunday, 26 October 2014
Tonight I have decided to sit in the company of my lady wife whilst she indulges herself with the x-Factor.
Please tell me that I am not alone in considering it egregious tripe?
Update @ 20:25.
That's it. I can't take any more. I am off to bed.
I had my upper wisdom teeth removed on Friday under 'sedation' which is, AFAICS, no different to a general anaesthetic. I can clearly remember him sticking the needle into the back of my hand at the start, at which stage I averted my gaze... and I can vaguely remember them turning off the drip, hoisting me out of The Chair and hoisting me onto a bed in the recovery room, but nothing in between.
You do appear to come round quicker though. I climbed into The Chair at about 9.55 and the first thing I did when I came round was to check the time, it was 10.15. A recovery room nurse once told me that smokers always come round quicker, their systems are used to getting rid of poison.
Her Indoors drove me home and I retired to bed. A couple of hours later, the anaesthetic had worn off and it hurt quite a bit, but no head splitting pain or anything, so I decided to do without the Aspirin I'd bought just in case. Saturday in bed as well, to be on the safe side, this Sunday morning I was right as rain, to be honest.
So far so good.
Problem with all this is, they hand you leaflets telling you not to smoke for at least one day (but preferably two days, but preferably five days) after the operation. They don't say that drinking coffee or booze is discouraged for that long but IMHO drinking coffee or booze without smoking at the same time is just not the same.
Which is all well and good, but I do not function properly without at least six cups of coffee and twenty cigarettes a day. I just remained in a sort of drowsy state all Friday and Saturday with no particular urge to do anything or say anything. Or even complain about anything.
Hence and I why I haven't posted anything since Thursday.
Friday, 24 October 2014
I am reminded by this of a little story that I'd like to share.
The last 'family' holiday my mother dragooned me into was a visit to Paris with her, my old man and my sister. I must have been about 17.
We stayed at a hotel just near the Arc de Triomphe and did all the usual touristy things.
One evening, in the bar, the old man (who'd been a citizen soldier in the Western Desert and Italy) got into conversation with two other tourists of the same age as him. This was in about 1969 so he'd have been about 63 - about my age now. The other two tourists, one a German bloke and the other an American were about the same age and discovered that they had also been in the Western Desert and Italy. Things went well from then on. Their respective wives went to bed. They got stuck into the Kummel.
My mother knocked on my door at some ungodly hour and asked me to go down to the bar to find out how things were.
By that time the three of them had gone through at least two bottles of Kummel, and the overall opinion of the meeting was that WW2 was a bit of a mistake - and entirely the fault of the French anyway...
Thursday, 23 October 2014
Me: Ah, but DH has 'earned' a tax free £1.5m ish on his house....
Mountainousipswich: No he hasn't. Not until he sells it, if he sells it. And there could be a property crash before then. He may even - amazingly - want to live in it and pass it on to his kids.
Me: That's just silly. Of course he has it. If you bought shares and they went up you'd be richer. And all asset prices fluctuate. If his house price goes down he pays less tax. Really, come on now...?
Mountainousipswich: Shares are not money, where did you get that idea from?
If I buy ten shares in Apple at $10 a share, then I have $100 worth of shares, not dollars. Those shares might increase in value to $20 each, but I would only make an extra $100 if I sold them at that point. The shares may also decrease to $5 a share. But at no point do I have money until I have sold the shares and received the cash in hand.
Warren Buffett - who owns several billion in shares - would be completely penniless tomorrow if the world markets completely crashed.
I mean, really? Am I missing something?
From - very surprisingly - Conservative Home.
You really couldn't have better arguments for LVT/CI.
The Daily Mail has published a supplier's eye view of those Tesco charges.
Too good to cut and paste, scroll down to the blue box headed 'TESCO'S BULLYING TACTICS MEAN YOU HAVE TO PAY THEM!' SUPPLIER TELLS OF HARSH TREATMENT BY BRITAIN'S BIGGEST SUPERMARKET CHAIN.
What the article doesn't explain is the so-called "£263 million black hole". AFAIAA this is no such thing, all quite simple and a question of judgment.
i.e. if Tesco charges a supplier an upfront, non-refundable fee of £1 million to reserve a certain amount of shelf space for the next X months or Y years, should it book that as income on the day it is received or should it time apportion this over X months or Y years?
I'm not sure it matters as it's only a timing issue, so while profits are possibly overstated in the early years, once it's up and running, you end up with a fairly reliable profit figure - because while you are booking all of this year's charges as income, you are not including the corresponding fraction of earlier years' charges either.
(It's the same as fixed asset additions and depreciation. In the early years, it will spend more on fixed assets than it charges in depreciation, but after a few years, the two figures are very similar, i.e. the business is now charging 20% depreciation on the total additions of the last five years.)
From City AM:
FITBUG, a little-known Aim-listed firm that makes wearable fitness trackers, saw its shares rocket more than 350 per cent yesterday, after revealing that Sainsbury’s and a leading US retail chain would begin stocking its products next month.
The Fitbug Orb, which retails for £49.95 and connects to a smartphone app to track daily routines and nutrition, will be sold in 293 Sainsbury’s supermarkets from 9 November and all 1,800 Target stores in the US.
Fitbug’s shares soared from 0.37p to 1.7p yesterday on news of the deal, the company’s largest distribution deal to date, pushing its market valuation from £630,000 to over £3m.
We know from the recent Tesco episode that supermarkets charge new entrants a fee to stock their goods, in other words, the supermarkets are renting out shelf space. If the "internet" (i.e. glorified mail order) were really such a threat to bricks and mortar retailers, then clearly this wouldn't happen.
We don't know how much Fitbug paid Sainsbury and Target, if anything, but as the market capitalisation of the company went up by nearly £3 million, so in theory, those two chains could have charged Fitbug a signing on fee of £2 million or so.
And whether or not a signing on fee was paid, the lucky shareholders have made an overnight gain of nearly £3 million.
Is that really all earned income? It can't be, because that's the net present value of the additional future profits. Emphasis on "future" - it hasn't been earned yet, somebody else has to do the earning.
And being a shareholder is like being a mini-monopolist. Although there's nothing to stop other people developing and manufacturing these fitness gadgets, there is a limited number of Fitbug shares, and Fitbug have stolen a march on their competitors by being on the shelves first.
And so on.
Wednesday, 22 October 2014
From the BBC:
Children are to unite for their annual exposure to pop stars who ceased being famous before they were born.
Tina Barrett, Paul Cattermole, Jon Lee, Bradley McIntosh, Jo O'Meara, Hannah Spearritt and Rachel Stevens will perform a medley of their greatest hits on the BBC appeal show on 14 November.
The BBC also provided free publicity to the group in 2000, when they released Never Had a Dream Come True, which reached number one as a result.
"This is going to be, er, interesting," the children said, "We ended up watching BBC Ex-Pop stars in Need last year as well, mainly because our parents wanted to watch it. Didn't recognise any of them, if truth be told."
From the BBC
An activist group in the United States has been carrying out deeds that some might think the stuff of dreams - buying and cancelling other people's student debts.
Rolling Jubilee has purchased and abolished $3.8m (£2.35m) of debt owed by 2,700 students, paying just over $100,000 (£62,000), or as it says, "pennies on the dollar".
Blimey, that isn't much of a slice of the amount owed.
The group pulled off the deal to illustrate how cheaply the money owed can be sold on the secondary debt market, she says.
"We wanted to question the morality around repayment," she says.
"Your debts are on sale. They are just not on sale to you."
Which if true, is just terrible.
Many of Everest Colleges' debtors are single mothers and are on low income, she says.
"It is documented that they end up worse off and have no better chance of getting work than if they simply finished high school," she says.
Ah, right. So, the reason the debt was "pennies on the dollar" is because most of them took out student loans and are really bad risks. Single mothers on low incomes are not going to be paying back anything on their student loans, will struggle to get jobs that will mean they have to start paying back money or finding a rich man to pay it for them. A few will find something that pays well enough to start paying back and that's where the 1/40th of the original amount comes from.
Incidentally, I listened to a You and Yours program the other lunchtime about students saying they were worse off than their parents, that included a student complaining that she had to do a really boring job because there were no jobs for composers with her music degree (unlike Elvis Costello who worked as a data entry clerk and Mark E Smith who worked in a shipping office) and some freelance film bloke who for some reason had to be in London. Of course, the flip side was the idiots talking about how young people had lots of electronics, as though £600 for a phone is any more than a rounding error on people's costs compared to £250K for a house (I think when my father bought his Amstrad computer that it cost about the same as 2 months' mortgage).
You are confusing "rent-seeking" and development for profit. If a landowner does not develop land with potential for improvement he does not lose anything (take set-aside as a case-study) but if he develops the land your increased "location" tax becomes a drain until the development is passed on. It becomes a giant pass the parcel until someone wealthy enough to hold the developed land acquires it. In fact what it does is ensure that it passes to the very "rent-seekers" you are trying to eliminate. LVT is a great reason NOT to develop or improve property.
If you are getting services and benefits you should be making a contribution (however small) towards them.
The Left's hatred of anyone who rents out a property or owns land is envy, pure and simple.
As long as you tax the rental income properly, don't allow tax free gains on the properties and stop developers just hoarding land, a healthy rented sector is good for the housing market and for society as a whole.
Guess what happens when you put a tax on rents. They go up.
The whole concept of council tax is based on their belief you own nothing and your home is theirs to charge rent for.
Something that hasn't really been explained in the past few years is the demise of "star value". There was once an era that Tom Cruise's name over a film would automatically get an initial audience in who would either rave about it (Rain Man) or tell people to avoid it (Eyes Wide Shut). Star names have been replaced more with franchises, or even studios. The Pixar and Marvel names will bring in crowds in a way that Tom Cruise or Will Smith don't.
I'm mostly ambivalent about this, but I generally rather like the films that Tom Cruise is in. Of all the movie stars out there, I think he's generally selective more on quality than pay cheques, which means you've got a good chance of getting good value going to see a film with his name on.
It's the only reason I can think of that the Edge of Tomorrow was a bit of a flop at the cinema, although the movie seems to be rebranded as Live. Die. Repeat, so maybe the name was a problem. It's brilliant, and a rare thing, an action sci-fi movie that thrills in the action, and has some sci-fi that's logically consistent and doesn't fall apart before the end. It's also funny at times, with some dark humour in it. Well worth 3 or 4 quid.
Simon Jenkins in yesterday's Evening Standard:
The new proposed rate of £3,000 ['Mansion Tax' on homes worth £2 - £5 million] will come on top of the average of £2,000 that H-band properties already pay in council tax. Indeed, London valuations are so out of date that many bands E, F and G may pay mansion tax.
But the total tax will still be way below what such properties would be paying had the old rates been indexed rather than abolished (for the poll tax) in 1989. Tony Travers, the local government expert at LSE, estimates that the rates on “mansion-taxable” properties would today be in the range of £6,000 to £20,000 a year.
It's not that far off actually, if you add Council Tax and Mansion Tax together. So anybody who bought pre-1989, i.e. all the Poor Widows In Mansions, has no reason to complain; that's what they signed up for.
Tuesday, 21 October 2014
According to Aditya Chakrabortty, the government pays out £85bn a year in tax breaks and subsidies to business.
Kevin Farnsworth, a senior lecturer in social policy at the University of York, has spent the best part of a decade studying corporate welfare – delving through Whitehall spreadsheets and others, and poring over Companies House filings. He’s just produced what is, as far as I know, the first ever comprehensive audit of the British corporate welfare state.
The figures, to be published in a forthcoming report, are astonishing. Farnsworth takes the financial year 2011-12 and tots up the subsidies and grants paid directly to businesses. They amount to over £14bn – that is, almost three times the £5bn paid out that year in income-based jobseeker’s allowance.
Add to that the corporate tax benefits, the value of the cheap credit made available to banks and other business, the insurance schemes run by the government to protect exporters, the marketing for British business laid on by Vince Cable’s ministry, the public procurement from the private sector … Farnsworth calculates that direct corporate welfare costs British taxpayers just shy of £85bn a year.
Nor does this figure include the cost of bailing out the banks or the millions in housing benefit that goes straight into the pockets of private landlords.
The bill for corporate welfare is huge – and largely hidden. We know a lot about the people who claim social welfare: we know how much each benefit costs the public, the government sets strict rules for eligibility – and we even have detailed estimates for how much cheating goes on. Between them, Whitehall, academia and NGOs have churned out enough surveys on social welfare claimants to fill a wing of the Bodleian library. But corporate welfare? The government has itself acknowledged: “There is no definitive source of data about spending on subsidies to businesses in the UK.” The numbers are scattered across government publications and there is not even any agreement on what counts as a corporate handout.
Whilst some of this is bribes to companies like Disney to spend money here rather than elsewhere and can be shown to actually be revenue-positive, much of it goes to recipients like the "defence" industry, a sector of commerce so heavily subsidised that we would actually be better off without it.
Mainly, however, it shows up the Tories' harrying of the poor for the cynical vote-chasing exercise it really is. If they were really interested in reducing public spending, this would be a good place to start.
Posted by Bayard at 20:04
Neither of these are new, particularly correct or even relevant to the debate, but it's nice to see two completely contradicatory KLN's being wheeled out in the same article in The Telegraph:
Many politicians are concerned that an influx of foreign investment is leaving the capital’s leafier streets less diverse, with more oligarchs and fewer British families. But a mansion tax would – by definition - make certain expensive neighbourhoods even more expensive.
Nick Paget-Brown, the leader of Kensington and Chelsea council which has the highest concentration of £2 million+ homes, said the levy would force long-term residents to move out “making way, no doubt, for some real billionaires”.
Levying a charge of £3,000 a year on homes worth £2-3 million will raise £140 million, according to Savills. That leaves Labour seeking to raise £1.08 billion from a remaining 57,000 properties worth over £3 million, paying an average of £19,000. It means that the bulk of the revenue is balanced on a relatively small number of mobile people.
Firstly, the tax would not make buying a home in these areas more expensive as the very modest tax comes off the price.
Secondly, can these Homeys make up their minds whether we'd end up with more oligarchs or fewer oligarchs? And then please explain which of these is more desirable and why?
I suspect we'd end up with more oligarchs in the expensive areas, but on balance that's a good thing; they're happily paying a bit more tax plus spending loads of money here, which is good for the UK's balance of payments.
If and when I'm retired, I'd rather live on a street with normal families than be surrounded by mansions which are vacant most of the time, so if normal families downsize to a normal area (with a million quid unearned, untaxed cash to spend), that must surely be A Good Thing.
MBK emailed in a splendid new variant of the "diagonal comparison" in The Times, it goes like this:
"If I am forced to pay LVT, then I will have less money to spend on [worthy cause]", in this case, charitable donations.
The author of the piece is so Home-Owner-Ist that he completely lacks any sort of perspective, he appears to think that he will garner sympathy with drivel like this:
I HAVE just been to the top floor of our house. I so rarely go there, it always comes as a surprise… I came downstairs, thinking, as I always do, where do all these rooms come from? Do I really own all this? Sorry, I mean we. My wife is joint owner. In fact for many years she was paid more than me…
We bought our house, in north London, in 1963 — three storeys, Victorian, for £5,000, after I negotiated down the price from £5,250. I tell locals this all the time — just to make them sick…
Our house today is technically a mansion, even though it has just two bedrooms. (We each have a writing room, plus two sitting rooms.) On paper it must be worth about £2.5m. That’s what one in our street has gone for…
I do know two widows who, like us, have been here for years, never knowing what would happen to our property prices, who will simply not be able to afford to pay a mansion tax every year. They could be forced to sell…
I will pay, and can afford to, but it could mean I will give less to charity. I was thinking of giving again to the Cumbria Community Fund, but won’t if I suddenly have to find £20,000 a year for the rest of my life.
Monday, 20 October 2014
From today's Evening Standard:
Samuel Thompson's claim (Fri) that the smoking ban has improved pubs and bars is only true if you think they should be dreary places no one would want to stay in for long.
From Revealed Tech:
Days after describing online abuse suffered by TV presenter Chloe Madeley as “crude and degrading”, Justice Secretary Chris Grayling told the Mail on Sunday that he was determined to “take a stand against a baying cyber-mob” and would allow magistrates (who can currently impose jail terms of up six months on internet trolls) to pass serious cases up to crown courts, who in turn would be able to impose maximum sentences of two years.
From The Daily Mail:
PM slashes the welfare cap to £23,000 a year: £300m in benefit savings 'will help fund millions of apprenticeships'
Woo hoo! I didn't realise that you could persuade employers to take on another apprentice for just £150 a year. [unfortunate decimal point now removed, h/t H in the comments]
That looks like very good value to me, why did nobody think of this before?
UPDATE: Bayard in the comments insists that "millions" can mean "any number larger than one million", rather than "any number larger than two million" which is my interpretation, in which case, please revise that £150 figure up to £300 Or indeed £299.
From The Daily Mail:
When toasting a special occasion with a bottle of bubbly, classy champagne flutes are the obvious choice for many. And while it may go against tradition, experts are urging drinkers to ditch their crystal flutes in favour of pint glasses.
This is because faffing about with a few thimbles of drink and having to go for a refill every few minutes makes it very difficult to carry on a normal conversation, according to wine connoisseurs.
Using pint glasses also enables you to lift the same glass to a long series of toasts, rather than sitting in awkward embarrassment in front of an empty glass wondering whether you should have waited before downing the few drops of golden liquid you were given half an hour ago.
Frederico Lleonart, a global wine ambassador for drinks company Pernod Ricard, says a pint glass full to the brim with champagne also emphasises the aroma and fizz in better and more complex champagnes.
"When the sparkling wine or champagne has complexity, depth and autolytic notes, such as the best cavas or champagnes, then your best option is to have enough to keep you going for an hour or so, rather than drinking it out of glorified thimbles," he told The Sunday Telegraph.
Sunday, 19 October 2014
This is the best British sit-com since The Peter Principle.
In fact, it more or less is the Peter Principle, only it's set in a job centre, not a bank and the main character is female, not male.
It's on ITV2, Wednesday 10 o'clock.
Saturday, 18 October 2014
Friday, 17 October 2014
Posted in the comments by Adam Collyer:
From the Alcohol Concern website:
"The Alcohol Harm Map, produced by Alcohol Concern in partnership with the pharmaceutical company Lundbeck Ltd. The purpose of the map is to reveal the real harm and cost of alcohol at a local level, so that local authorities and local health providers can ensure that alcohol prevention and treatment services are available to those with drinking problems..."
From Lundbeck's website, one of their UK products is called Selincro (generic name nalmefene).
And from the website of NICE, the National Institute for Health and Clinical Excellence (the government agency which recommends which products should be used by the NHS):
"NICE has been asked to appraise nalmefene for reducing alcohol consumption in people with alcohol dependence in a single technology appraisal. The expected date of publication of the appraisal is November 2014."
Perfect timing it seems...
From the BBC:
More than a million pensioners are still living in poverty, partly due to their failure to claim benefits, the charity Age UK has claimed...
The report found that:
* 1.6m pensioners are missing out on Pension Credit, worth £33 a week
* 2.2m pensioners are missing out on Council Tax Benefit, worth an average £728 a year
* 390,000 pensioners could have claimed Housing Benefit, worth £48 a week
Age UK said that many people do not know that they are entitled to the extra income. Others feel too proud or embarrassed to claim...
The DWP said that people can claim housing benefit and pension credit in just one free phone call on 0800 99 1234, without the need for a signed form.
Also from the BBC:
The government has been criticised for not increasing its efforts to tackle housing benefit fraud "sooner".
The National Audit Office said overpayments due to fraud and error had risen from £980m to almost £1.4bn between 2010-11 and 2013-14.
It added that the Department for Work and Pensions faced an "escalating problem", accepting that housing benefit was "difficult" to administer.
Thursday, 16 October 2014
When Spanish politicians start yapping on about Gibraltar, the correct response is to remind them about Melilla, Ceuta and the Perejil Islands.
Here's the funny bit:
Daybreak in the Spanish north African enclave of Melilla revealed a headache for Spanish police, as around 100 illegal migrants had climbed onto the territory’s security barrier.
They evaded Moroccan security to climb the fence in the dark, but as the sun came up they were caught on the wire in full view of the Spanish police. With the deterioration in security in places like Mali and Southern Sudan more refugees are making their way to Spain’s African territories, as once there they can gain right of entry to the EU.
Although illegal under the Geneva Convention, the Spanish are working with the Moroccans to make sure most are sent back.
Fair play though, at least the Spanish don't just give them a through ticket to Calais.
UPDATE: I've just noticed this is the 10,000th post on this blog.
From the BBC
The Government is "really concerned" about the rising cost of tickets, and has asked for football clubs to review their pricing.
Minister for Sport Helen Grant told the BBC: "I feel clubs really must not take their fans for granted."
The average price of the cheapest tickets across English football has risen at almost twice the rate of the cost of living since 2011.
BBC Sport's Price of Football study analysed prices at 207 clubs. The average price of the cheapest match-day ticket from the Premier League to League Two in England is now £21.49.
The problem here is that football is basically an arms race, with the fans that pay the most (or the teams with the richest sugar daddy owners) getting the best players and winning the trophy. So, if fans pay a bit more at one club, the fans at the next club either have to pay more, or lose.
"I can see why fans are cross. I'm cross," said Grant. "Fans are the lifeblood of the game, without the fans we won't have football the way we know it. To take a family of four to a Premier League match now you're talking about £130, and that's before petrol, parking, a programme, hot dogs, burgers and a drink."
The game is surviving at those prices. If people stopped going because they were appalled at the price and only willing to pay £100, the prices would fall to £100. All the players would have to take a haircut on their salaries (so Wayne Rooney would get £250K/wk instead of £300k/wk) and at the top clubs, every seat is full.
Back in the early 80s, the best players were earning something like £100k/year. You had full grounds then, excellent players like Glenn Hoddle and Gary Lineker. And they probably still collected a lot of the clubs' money, it's just that the clubs didn't have so much.
Justin King, former chief executive of British supermarket Sainsbury's, feels clubs could fail if they do not meet the needs of supporters.
"Any business that thinks it can simply rely upon the loyalty of its customers, regardless of how they treat them, in the end will fail," King, a Manchester United supporter, told the BBC.
But football teams can. They aren't like Sainsbury's where your loyalty lasts a couple of weeks of not being able to get ciabatta or chicken breasts. Even movie and music fans will only give performers 2 or 3 duds before they stop buying from them. But football fans are often for life, will keep on paying to see "their team" even after it's been rubbish for years. That's why don't care about most disgruntled fans. They know they'll keep coming back for more.
From the archives:
BBC, 14 February 2011:The number of admissions to hospital in the UK because of problem drinking could rise to 1.5 million a year by 2015, a charity says.
Alcohol Concern estimates that it will cost the NHS £3.7bn annually if nothing is done to stop the increase... The charity says the number of people being treated in hospital for alcohol misuse has gone from 500,000 in 2002-3 to 1.1 million in 2009-10.
BBC, 26 May 2011:The number of alcohol-related hospital admissions in England has topped 1m for the first time, according to official statistics.
An NHS Information Centre report said admissions had increased by 12% between 2008/9 and 2009/10... The number of admissions reached 1,057,000 in 2009/10 compared with 945,500 in 2008/9 and 510,800 in 2002/3.
From The Daily Mirror, yesterday:
Heavy boozers are putting the NHS under “intolerable strain” and risk sparking a health crisis which will cost the country billions, a charity claimed yesterday. Alcohol Concern said 9.9million NHS admissions in England – including hospital patients and clinic and A&E visits – were related to alcohol last year...
While A&E admissions accounted for six in 10 alcohol-related hospital visits, inpatient admissions were responsible for almost two thirds of the total cost burden of £2.8 billion, according to the charity.
Way to go!
Wild estimate of alcohol-related admissions revised up from one million to ten million in the space of three years, but somehow the wild estimate of cost has drifted down from £3.7 billion to £2.8 billion.
They mention lots of figures for the cost of treatment of very specific ailments, but those are in the millions, not billions, so barely worth adding up.
NB, that £2.8 billion is less than three per cent of the total NHS budget and only a small fraction of total revenues from taxes on booze.
Wednesday, 15 October 2014
Pinched from the Labour Land Campaign FAQs:
Today, discussions held with Treasury officials, politicians and academics frequently end with them saying they agree that an annual LVT is a good, sustainable, redistributive, fair and green tax but after the poll tax riots it would take a courageous government to introduce it!
The LLC respond thusly:
This is not a logical response and makes no sense to dismiss a tax that will not only benefit business, workers, the environment and the economy but help to rectify an injustice inflicted on people over centuries.
To describe this as "not a logical response" is an insult to not a logical responses.
The point about the Poll Tax riots was, if you give one million really wealthy households a high profile tax cut of £10,000 each and impose an in-your-face tax (or benefit cut) of £1,000 each on ten million poorer households, you get riots.
So doing the opposite i.e. scrapping the Poll Tax and reinstating Domestic Rates would have led to fewer riots. Keep going in the same direction and replace Domestic Rates with LVT, you'd get zero or a negative number of riots, if there is such a concept.
And the harsh fact is that wealthier people are relatively docile when it comes to tax hikes, especially when it comes to 'national' taxes. There were no 50% or 45% income tax riots. There were no riots when they took away child benefit from the top ten percent of earners. There were no riots when they hiked VAT by 5% or when they hiked National Insurance by 2%.*
So if we scrapped a shedload of bad taxes and replaced them with LVT, does anybody seriously think that Poor Widows will leave their mansions and throw their Zimmer frames through plate glass windows? Will merchant bankers in balaclavas be firebombing the nearest HMRC office or town hall? Will the Dukes of Cadogan and Westminster be looting their nearest Curry's or JD Sports?
And if it comes to it, for each Poor Widow, merchant banker or Duke, there are a hundred thousand people who'd be considerably better off each year, and I doubt that they would come out in sympathy.
* All these tax hikes were bad tax hikes; the Child Benefit cut was a bad benefit cut, that's not the point here.
From City AM:
BRITAIN’S housing market is inflated by tax rules, which push up prices, and is left vulnerable to booms and busts because of stamp duty, the European Commission (EC) warned in a report yesterday.
Transaction taxes such as stamp duty can cost buyers tens or even hundreds of thousands of pounds on each purchase, forcing them to hold on to property longer than they would like.
"Transaction taxes on properties tend to discourage transactions, which might ultimately make the market thinner and thus hamper the price discovery process," said the report on taxes across the EU.
And the failure to update council tax in line with house prices also pushed up prices, the EC said.
"Failure to update the tax base regularly risks leading to erosion of the tax base — and thus revenue — over time, while giving further support to rising house prices," the report said.
Solutions could include cutting stamp duty – which ranges from zero to seven per cent, depending on the sale price – and reforming council tax to make it more progressive and more in tune with the current housing market.
Correct. SDLT at higher rates and IHT (bad taxes as they impede transactions and/or are jealousy surcharges and/or semi-regressive) primarily collect that element of land values which are unaffected by Council Tax (bad tax because it is regressive to the point of being a Poll Tax).
So why not merge the three into a flat tax on land values or house prices? We could call it "Domestic Rates" or something. Once you start along these lines, you realise that there are plenty more of these stupid little taxes on wealth or transactions which we could chuck into the mix, to the overall benefit of everybody.
From the BBC:
Smoking could be banned in Trafalgar and Parliament squares as well as the city's parks if a report by London's Health Commission is implemented.
Other measures put forward include Oyster card discounts for commuters who walk part of the way to work, and a ban on junk food shops near schools…
Simon Clark, director of Forest, said: "A ban on smoking in parks and squares would be outrageous.
"There's no health risk to anyone other than the smoker. If you don't like the smell, walk away.
"Tobacco is a legal product… The next thing you know we'll be banned from smoking in our own gardens in case a whiff of smoke travels over the fence."
Tuesday, 14 October 2014
Is this politically difficult? Most Londoners rent and have no realistic chance of living in a multi-million-pound house. The middle classes have nothing to fear from higher property taxes and everything to fear from further increases on their earning power. The asset-rich, cash-poor who do not wish to downsize can be accommodated by a roll up, which even over 30 years will only equate to the last five years’ unearned capital gain. All the better if extra council tax is kept in London: a big boost to local democracy.
Joe Momberg, Young People’s Party
Thanks to MW for input
Posted by mombers at 13:28
An article at the BBC which lives up to its title.
It will probably turn out that the article was copied wholesale from somewhere else, but there you go.
Monday, 13 October 2014
From the BBC
All commuters believe that Southeastern trains offers "good value for money", a BBC survey has found.
The survey, carried out on behalf of the BBC by polling company Populus, marks the start of the first day of the company's renewed four-year franchise. The franchise, run by Govia, covers Kent, and parts of Sussex and London.
Neville James, who commutes from Ebbsfleet, said it was making him lots of money using the service. "I stand on the train... that's how many people love it," he told BBC Radio Kent.
The survey also found 100% of people were satisfied with the experience of using Southeastern. It was carried out by Populus and sampled 1,000 commuters. It found that 100% agreed Southeastern offered "better value for money than taking a job locally".
Tunbridge Wells MP Greg Clark said: "Across the whole region... people feel they're getting good value for money. If you're paying £4,000 a year that is a huge sum of money, but as you're making a lot more by working in London, it's good value".
Spotted by View From The Solent in The Telegraph:
Two escaped cows that went on the rampage have been shot dead during a seven-hour stand-off with armed police, who scrambled a helicopter to hunt down a third escaped animal.
Officers were sent to hunt down the cattle after they escaped from Norwich Livestock Market as they were being loaded on to a lorry by their owner, on Saturday afternoon.
Armed officers were sent in to shoot the cows, with the agreement of the owner in the "interests of public safety", Norfolk Police said. A third escaped cow, which managed to evade capture by police, was found dead in nearby woodland at around midnight...
A stand-off? Was it an armed stand-off, and if so, who armed the cows? Were they surrounded by police calling them to surrender through a loud hailer? How did the third cow die? Did they find it next to a pistol and an empty whiskey bottle?
The responses to last week's Fun Online Poll were as follows:
Is it possible to a have an eco-system where all the animals are carnivores?
Yes - 15% votes
No - 74% votes
Other, please specify - 11%
Clearly the answer is "no", well done 74% of us.
As DP said, "Such an eco-system would reduce to a snake eating its own tail."
There is not earthly way that you can explain how the answer could be "yes" and there is no third possibility.
This week's Fun Online Poll is fairly self-explanatory.
Vote here or use the widget in the sidebar.
Sunday, 12 October 2014
From the Guardian
Last week, as the Tory faithful cheered on George Osborne’s new cuts in benefits for the working-age poor, a little story appeared that blew a big hole in the welfare debate. Tucked away in the Guardian last Wednesday, an article revealed that the British government had since 2007 handed Disney almost £170m to make films here. Last year alone the Californian giant took £50m in tax credits. By way of comparison, in April the government will scrap a £347m crisis fund that provides emergency cash for families on the verge of homelessness or starvation.
If you follow that article, you find the following:-
The first analysis of accounts for the Disney movies made in the UK reveals that since the scheme was introduced in 2007 the company has benefited from HMRC to the tune of £167.6m. Last year the tax credits reached a high of £50.1m, believed to be the largest ever payment to a studio. A third of that was awarded to the blockbuster Thor: The Dark World, which was filmed at Pinewood Studios in Buckinghamshire.
To qualify for the tax relief, 70% of a film’s labour costs must be paid to European workers and at least 25% of the production costs spent in the UK.
So, Thor: The Dark World received £16m of tax credits. According to Box Office Mojo, that film cost $170m to make (or around £105m). Most of that cost goes on staff - the writers, actors, crew and CG artists. So, around £73.5m gets spent in Europe for £16m of tax credits (and in reality, if you're in Pinewood, most of that will be going to the UK). If you work out the taxes spent on that £73.5m, it's probably about break even, or even a money earner.
Jonathan Isaby, chief executive of the Taxpayers’ Alliance, said: “Fiddly little favours for special interests are why we have such a terribly complicated tax system and it’s why ordinary taxpayers no longer trust that everyone is paying their fair share. Exemptions and reliefs like this should be scrapped altogether, and we should then cut the rates for everyone to attract investment and boost growth. It’s not up to politicians to pick winners through the tax system, so radical reform is a must for the next government.”
This isn't "picking winners". The government knows what the budgets of these films are, what the subsidy costs and what extra taxes and jobs you'll bring here. That's pretty much known. And these exemptions and reliefs exist not because we have a complicated tax system, but because we have the wrong tax system, based on incomes rather than land (and the TPA are against council tax, so I think we can assume all land taxes).
Income tax takes no account of the flexibility of labour demands in a globalised world. It's a rather unbusinesslike and anti-free market way of taxing people. Any normal business understands that you have market segments.
Take moviegoing. People have different reasons for going. Some people go to have a pleasant evening with a date. Some people just go to see a movie. The first group aren't just going to see a movie in a better format. It's about an evening out. They can't really replace it with watching on Blu-Ray. The second group can. Plus, lots of people want the Saturday night tickets. Cinemas therefore price differently. They can charge up to the rate that fills an auditorium on Saturday, but on Tuesday, they don't fill auditoria, so charge people a bit more than a HD rental, the alternative they're competing with, and get some people in. Not a huge amount of people, but it's still money and better than empty seats.
The fixes governments do of handing out tax breaks are simply a crude attempt to deal with that flaw in income tax. It doesn't discriminate between a film company making films about jousting that can do it in a huge number of places, and therefore can pick the one that has the cheapest costs (and tax is a factor in costs), and a cafe owner outside Windsor Castle that can't.
But LVT deals with the problem without any further tweaks for particular industries. The sort of businesses that can put themselves in any country are also generally businesses that can put themselves anywhere within that country (e.g. Pinewood have opened a new facility in South Wales). By introducing it, you don't need exceptions for certain industries. Flexible industries will come here, use cheaper areas of the country and create jobs. OK, they won't pay as much tax as the Windsor Castle cafe owner per head, but it's better to get a job with someone paying some tax than a business going to China and having lots of people on the dole.
And if you want a moral perspective, who has got more from the state? If the state had left Windsor Castle as a wreck after it caught fire rather than spending £37m repairing it, how much money would a cafe outside of it earn? So, why shouldn't that cafe owner, who gets a large amount of the benefit from that huge amount of money pay a larger share of paying for it?
Posted by Lola at 13:01
Saturday, 11 October 2014
I am about to attend an 'Annual Property Seminar' hosted by a local Surveyor, and representatives from firms of local lawyers and accountants.
Every year we get the usual 'planning is the problem' (the 'only' problem), rents are too low, business rates are too high, we are not building ennough houses etc. etc. arguments.
This year I have decided - if the opportunity arises - that I am going to start an argument...
Now, as we know, although planning is an issue, there are other factors that are driving up house / land prices, so here follows the arguments that I think apply. Your analysis, disputations, useful links and comments would be appreciated. As my maiden aunt used to say - 'Fortune favours the well prepared'.
1. We don't have a house supply crisis. We have a tax, rent and subsidy crisis.
i) House completions have been running at about 167,000 per annum for ten years which has roughy kept pace with population growth. (Evidence?)
ii) Immigrants are taking all the social housing. No they aren't (Data?)
iii) Foreign buyers are pushing up prices. Yes, but only in London (Answer - Land value tax would sort that).
iv) There are plenty of houses for sale, but subsidies to Buy to Let landlords price out FTB's by:-
a) Handing them an effective approximately 20% discount by their ability to claim all sorts of costs against tax which private buyers (quite rightly) cannot do.
b) Lenders using less onerous criteria on lending to BtL than they do for private buyers.
c) The application of Council Tax rather than Business Rates to BTL property.
d) £18Bn housing benefit subsidy.
e) Anything else?
v) Tax policy destroys take home pay. (Tax reform. LVT?)
vi) The 'distance from place fo work' / Travel cost / Travel Time price issue. That is that all the 'profit' or 'savings' end up in land prices. (LVT fixes that).
vii) Help to Buy for FTB's just forces up land prices. (The article I linked to the other day proves that)
viii) Mis-regulation of the mortgage market on an industrial scale. (I know a lot about that!!).
ix) NIMBYism. Speaks for itself, and enabled by the....
x)...the 19xx Town and Country Planning Act.
xi) Massive Land Banking by house builders. (Quick references to evidence please)
xii) Anything else I need to remember?
2) Business rates are not an issue. They are levied on the wrong people! (All the usual LVT arguments...)
Friday, 10 October 2014
"Amy Childs enjoys another date with Adam Smith... days after confirming their blossoming relationship"
From The Daily Mail:
After revealing that she wants to find a moral philosopher of her own, it appears that she's getting closer to achieving her lofty goal. Amy Childs was spotted going to dinner once again with 18th century economist Adam Smith in Brentwood, Essex, on Thursday.
Former TOWIE star Amy recently confirmed that her first date with the dour Scot was at the dining hall at Balliol College, Oxford over two centuries ago.
With her fiery red hair blowing in the inclement weather, Amy donned a layered form-fitting black dress, which showed off her cleavage thanks to its plunging neckline. Walking beside the tanned beauty, Mr Smith wore his customary powdered wig and dark frock coat.
From an article in The Guardian about Scotland's replacement for SDLT, known as "Land & Buildings Transaction Tax", which is the same general (bad) concept as SDLT but is calculated differently:
Tories accused the SNP of an "assault on aspiration", and estate agents said the system would penalise people who were not cash rich but needed to live in more expensive areas.
The economically illiterate Tories are assuming that the tax is borne by the "aspiring" buyer, the person trying to "move up the property ladder", it is not. In economic terms it is borne by the seller because he has to accept a lower selling price.
Now, if the up-sizing buyer is "aspirational", then what is the down-sizing seller? Whatever the opposite of "aspirational" is. So it's actually a tax on the "non-aspirational".
And we've heard the KLN time and again that LVT is a "hammer blow to the asset-rich, cash poor" and the quoted estate agents have cheerfully and incorrectly applied the same non-logic to this tax which is a tax on movers, not on stayers.
Can they please explain where "people who are not cash rich" are going to get the money to buy a home in "more expensive areas"?? Even glossing over the fact that the price comes down accordingly, so it's just like paying a larger deposit.
No, I thought not.
The Lib Dem conference this year was a big disappointment. Instead of proposing that we all ride round on bicycles powered by moonbeams or women-only shortlists for offshore windmills, it was all rather realistic and sensible.
The only really stupid idea was Clegg's suggestion that the rate of capital gains tax be increased in order to be able to reduce the tax burden on the lower paid. People get all heated about CGT, but it is a very minor source of revenue, it covers less than 1% of total government spending, a point which everybody, from Clegg to Booth missed.
Philip Booth in City AM yesterday:
Indeed, when the top rate was increased to 28 per cent under pressure from the Lib Dems, it was felt by the Treasury that this was the rate that maximised the revenue from the tax.
As it happens, CGT revenue has roughly halved since the rate was increased, although this may have been for other reasons. Nevertheless, it is quite possible that we are already on the wrong side of the Laffer curve – in other words, beyond the revenue-maximising rate (a notion popularised by the economist Arthur Laffer via his famous curve) – as far as CGT is concerned. Certainly, we are not far away from the top of the Laffer curve.
From this morning's City AM Reader's Letters:
The biggest yield from capital gains tax (some £7.4 bn) came under Alistair Darling's giveaway when liability could be crystallised at just 10 per cent for those who had held assets for a while.
People talk a lot of rot about the Laffer Curve, the lefties deny it exists and the right wingers often claim that every cut in rates leads to an increase in revenue.
The sensibles merely point out that if rates are too high, you can increase revenues by reducing the rate. This is the mathematically correct view, but ignores the fact that the revenue-maximising point still depresses the size or efficiency of the economy.
As it happens, I know from personal experience that ten per cent is the rate which clients were happy to pay, they weren't fussed about claiming deferment or hold over reliefs, or simply not triggering the gain or anything. They just sold what they wanted to sell and sent one-tenth of the gain to HMRC. A while ago I read that the Americans had noticed the same. So in all probability ten per cent is the revenue maximising rate.
It's still a bad tax of course. The irony is that the real point of CGT is not to raise revenue by taxing capital gains (hence and why the largest source of capital gains, owner-occupied housing, is exempt), the real point is to prevent people turning taxable income into otherwise tax free gains. So the system is quite different in different countries, and changes regularly in the UK, they are always struggling to reconcile these two quite different aims, but there you go.
As 'we' have said all along, Help to Buy is in reality 'Help to Sell'.
Evidence here in the penultimate paragraph.
Well done, Douglas Carswell in yesterday's by-election, but now comes the interesting bit and the reason why UKIP - with it's easily understandable manifesto* - isn't bigger than it is.
Exodus 20:3: "You shall have no other gods before Me"
Farage was always perfectly nice to me, but I was just a humble bean counter and form filler. It's people who show a bit of free spirit and possible rivals to share what little limelight is shone on UKIP who he can't stand (let alone people who seriously stand against him in leadership elections). I suspect that Carswell falls into one or more of those categories, so my money's on him standing as an independent in May 2015.
* "If you don't want all your taxes to be spent on concreting over the green belt with social housing for Romanian and Bulgarian welfare claimants, vote UKIP!"
UPDATE: The Stigler adds...
That's UKIP manifesto (South). UKIP Manifesto (North) is:-
"Note UKIP and we'll keep making sure you get lots of lovely benefits by keeping the Romanian and Bulgarian immigrants from getting their hands on them."
Thursday, 9 October 2014
From the BBC:
An Australian woman has been found 17 days after she got lost in a bush in northern Queensland with no food.
Shannon Leah Fraser stumbled out of the Acacia cowleana on Wednesday morning, reported local media. The 30-year-old was doing some weeding in her front garden before she disappeared on 21 September. She is now recovering in a hospital and is being treated for mild abrasions and severe sunburn.
The mother-of-three's disappearance sparked a search operation involving 2 officers from the police who prodded the bush with sticks and called her name.
Acacia cowleana is an ornamental shrub or small tree 6-12' with large grey (leaves) phyllodes and yellow rod flowers. Suitable for inland areas and temperatures in low 20's will damage the foliage. From inland northern Australia.
James Higham wrote about this at Orphans, there's no point me summarising you might as well pop over and read the whole thing but here's the flavour:
And therein lies the dilemma of free trade. As a staunch advocate of small and medium business ‘free’ enterprise, at what point does this become advocate of south-east Asian sweatshops?
Within our own country, we rail against – and quite rightly too – government interference designed to skim off any profit before the business can even get on it s feet, so that’s the opposite extreme.
Most people assume that "free trade" means international and cross-border, but internal free trade rules are just as important.
So if the USA enters into a so-called "free trade" agreement by which US companies are granted monopoly rights and protections in the other country, that is simply not "free trade". Had the other country granted those rights to its domestic producers that would not be free trade, why is it any different if it grants those rights to foreigners?
As luck would have it, to illustrate the point, there was an article in yesterday's FT:
You may think, like the Heritage Foundation, that Hong Kong is a free market. However, except for external trade, it is not.
Instead it is what one of the richest men in the city once described to me as “a nice bowl of fish soup”. That soup is fed to the few, making ordinary people poorer, stoking resentment, and indirectly contributing to acute pollution.
Apparently everything - from housing to public transport to supermarkets - is run by a few large cartels.
Or, turning to the worst tax of all, VAT, that is not particularly a barrier to imports and exports - but it is a barrier to free trade within a country.
Imagine that Scotland had voted for independence and rUK imposed an import duty of 20% on everything we bought from Scotland and vice versa, would we view that as anti-free trade?
Yes of course, but that's no different to VAT, which has exactly the same effect on economic activity. It's like treating each business as a foreign country and imposing a 20% import duty when a UK based consumer spends his own money on goods and services from it.
Wednesday, 8 October 2014
In other words more subsidy to Buy to Let landlords. Sigh.
From the BBC:
The 2014 Nobel Prize in Chemistry has been awarded to a trio of researchers for improving the resolution of optical microscopes.
Eric Betzig, Stefan Hell and William Moerner used fluorescence to extend the limits of the light microscope.
The winners were handed a very, very small cheque.
Here's a heroic diagonal comparison from The Telegraph:
Labour's mansion tax could leave pensioners facing death taxes worth almost half the value of their property, an analysis by Treasury aides has found...
It's not the pensioners facing the tax bill, it is their heirs.
An analysis by a Treasury aide found that a family home bought in London 30 years ago for £220,000 is now worth £2 million.
That's a handsome unearned windfall capital gain of about £1,600,000 after inflation. And a £220,000 house 30 years ago was a bloody expensive house even then.
The aide said that if Labour bases its mansion tax on Mr Osborne's [Annual Tax on Enveloped Dwellings] scheme, the home would face an annual levy of £15,400, costing a total of £308,000 if deferred for 20 years.
Well don't defer it then!
The mansion tax bill would be on top of a £560,000 inheritance tax, leaving families with an effective death tax rate worth 43 per cent of the value of their property...
Maths mistake: assuming the accrued Mansion Tax is an allowable deduction and rates and allowances don't change, the IHT would be £416,800, but never mind.
Logic mistake: it's not a death tax. It's a lifetime tax. The longer you live, the more it gets.
Logic mistake: what's to stop the parents inviting their heirs to pay the tax for them, I'm sure you can have a binding contract, so a sole heir chips in £15,400 a year for a more or less guaranteed return of £1,460,000 (£2 million less IHT). That's an IRR of 8%, handsome. I'd be happy to pay it; the IRR would be much more if the pensioners die earlier.
And let's do a proper like-for-like comparison: What if our cunning pensioners had been earning a load of income which they forgot to declare for income tax (a quasi deferment option)? The income tax (plus penalties and interest) is due whenever HMRC catch up with them, if they are still alive, then that is income tax, if HMRC have to collect it out of the estate, it is still income tax. That does not turn income tax into a 'death tax'.
Warming to my theme, what happens if somebody had had £1,600,000 in earned but undeclared income over the last 30 years and HMRC caught up with them just before they die, what would the tax bill on that be? Pretty much 100% once you take interest and penalties into account.
What if somebody has been putting £50,000 a year to one side out of fair and square earned income, all subject to PAYE, over the last 30 years, total £1,500,000? How much tax and NIC would he have paid/borne? Something like half that, £750,000?
"Mansion tax is catastrophic and deeply out of tough and will hit voters in parts of the country where Labour needs to make an impact. It sends a very clear signal that we are anti-aspirational and will hit people who are asset rich and cash poor."
What do we aspire to? Making massive windfall gains at everybody else's expense.
So, starting from today, if the government gave people a choice:
a) We can keep house prices low and stable, or
b) We can drive up the price of your house by 400% over the next 30 years but as a quid pro quo we will start charging you a tax of 0.8% of the final value in 30 years' time,
I'd vote for A (I have children, FFS) but I am sure that many people would vote for B. They still end up a lot better off. And who's to say that the Telegraph's Poor Widows wouldn't have voted for it 30 years ago?
UPDATE, re Ben Jamin's comment.
Those calculations above just look at the effective rate of tax on the unearned capital gain (about 30% - 40%, depending on assumptions) which is not excessive.
This still leaves the annual site-only rental value of about £50,000 a year entirely untaxed. Think about it, if a young couple moves to London and rents, what can they get for £15,400 a year? Not much, is what. Everybody expects them to cough up out of their hard-earned and highly taxed wages with nothing to show at the end of it.
Tuesday, 7 October 2014
There’s plenty of stuff in the news about getting rid of Business Rates, which chimes in with the standard fake-Capitalist arguments regarding LVT . That just like any other tax, they harm work and enterprise.
We can easily demonstrate this is all bollocks.
Firstly imagine a landlord(A) who rents out his site (plot A) for £4,000 per month to a Capitalist (A).
Capitalist(A) earns £5,000 per month, of which he keeps £1,000 (including his 10% profit). We can say, that the market has allocated this site to the Capitalist who can put it to its highest productive use, yielding a £4,000 pm productive surplus.
The landlord has no economic function. But, landlordism also produces no deadweight costs (loss of GDP), although those engaged in rent collection add no value (so you can impute a loss i.e. all the wealth they would otherwise be creating if they had proper jobs). What landlords do is increase income and wealth inequality.
So, if you imagine I owned all the land in the UK, and everyone paid me rent, GDP would actually be better than now (see below), but I would quickly become the wealthiest man in history, and everyone else would become poorer.
Now imagine that same site, plot A being owner occupied. We know the maximum income from it is £5,000 pm. The trouble is, this Capitalist (B) isn’t a very good one. He is only earning £1,000 pm from plot A. As an owner occupier, he is both Capitalist and Landlord. As a Capitalist his profit is still the same as Capitalist (A). But, as a landlord he is £4,000 pm down on Landlord (A).
This £4,000 pm is a loss of productivity, i.e. a deadweight cost. By being able to impute his rent (knock if off his costs), Capitalist B is shielded from the demands of the market. This lowers GDP. Capitalist B is a therefore burden on the rest of society.
What we need is the efficiency of market allocation via rents, with none of the inequality. So, let all capitalists be co-proprietors of all land, and let all capitalists only be tenants not owner occupiers. In other words Land Value Tax.
As we can now deduce, LVT cannot produce any deadweight costs. It eliminates them. It also ensures a fair distribution from the value derived from locational advantage. And, far from being a Socialist conspiracy, LVT is about as hard core as Capitalism gets. If you cannot pay the rent, you are a burden on society and can sling your hook.
And, as a bonus, the shared rent can be used to cut/eliminate damaging taxes on work and enterprise.
(I did think of posting this in a comment to MW's "Women Still Do A Lot More Housework Than Men, Study Finds" post - but overall, I thought that'd be a waste)
From the BBC:
Human Universe with Professor Brian Cox tackles the most profound questions he has ever asked: Why is he here? How did the universe make him? Did he make the universe? Is he alone? And what is his future?
In his own words, Brian describes Human Universe as a "love letter to himself" – as the series unfolds, he will show that he is the most precious, unique and wonderful supra-species in the universe.
Episode 1: Apeman Spaceman
The story of how on a tiny planet tucked away in an insignificant corner of the universe, one human being evolved to make the greatest leap of them all...
Professor Cox opens this new landmark series by asking the question: who is he? The first episode explores how it was that in a universe made of stars, rocks and endless space, a hyper intelligent scientist-cum-television presenter eventually emerged.
Of all the humans to have crawled, swam and flown over the Earth only one creature has evolved the ability to soar above them all - Professor Brian Cox. To Brian, this ascent is the pinnacle of his achievements.
Two articles, both stating the fairly obvious, but in a way, don't they cancel out?
From King's College:
Eva Krapohl, joint first author of the study, from the MRC Social, Genetic and Developmental Psychiatry (SGDP) Centre at the Institute of Psychiatry, Psychology & Neuroscience (IoPPN) at King’s, says:
"Previous work has already established that educational achievement is heritable. In this study, we wanted to find out why that is. What our study shows is that the heritability of educational achievement is much more than just intelligence – it is the combination of many traits which are all heritable to different extents.
"It is important to point out that heritability does not mean that anything is set in stone. It simply means that children differ in how easy and enjoyable they find learning and that much of these differences are influenced by genetics."
The researchers found that the heritability of GCSE scores was 62%. Individual traits were between 35% and 58% heritable, with intelligence being the most highly heritable. Together, the nine domains accounted for 75% of the heritability of GCSE scores.
From the BBC:
Pupils in poorer areas were likely to have fewer high-performing schools in travelling distance.
And within local areas, when individual sought-after schools used distance as a tie-breaker, it meant that wealthier families could afford to buy houses to get nearer to the front of the queue.
"Poor parents have fewer high performing schools available to them. This will remain true as long as proximity, and hence the size of your mortgage, determines access to such schools," said Anna Vignoles, professor of education at Cambridge University.
The good school = high house prices dilemma is easily solved. Stop taxing output and employment and tax land values instead. So the people in the catchment areas are at least indirectly paying for the education of people in cheaper areas.
But having solved that dilemma, we are left with the general conclusion that as intelligence etc. is hereditary and clever/confident people tend to earn more money, the better off people will always be the ones who can afford to buy/pay the LVT on homes near the best schools.
So best to start again from the beginning and try and make all schools into 'good' schools. There's no argument against that. Pissing about with lotteries for school places is a hiding to nothing.