Share
Could tax on housing be a way to help fill the black hole in the public finances at the same time as curing our national obsession with home ownership?
An intriguing policy paper published by a Liberal thinktank this morning argues that cuts in public spending can be only part of the solution. CentreForum says that Labour plans amount to even deeper cuts in public spending than the Conservatives managed under Margaret Thatcher after 1979 - and without a stock of state-owned industries and council houses around to raise cash.
That means taxes will have to rise too, it says - in complete contrast to Conservative plans for cuts in inheritance and savings tax - and that housing is the best way to raise it. Even after the housing market crash, our homes are probably still worth £3.5bn out of a total national wealth of £7bn.
Author Giles Wilkes proposes two key measures:
- Phasing out the loophole that exempts primary residences from capital gains tax (CGT) - raising £3-6bn a year
- Introducing a flat-rate levy to supplement council tax on homes above a threshold - a 0. 5% levy on the value of homes above £500,000 would raise £3-4bn.
A solution that prevents £6-10bn a year being cut from public spending has much to recommend it. One that tackles our addiction to property speculation by taxing it in the same way as every other form of investment is even more compelling.
Except for two things. First, CGT may not be as simple to introduce or as profitable as CentreForum makes out - a whole range of tax reliefs and tapers would see to that.
Second, even when presented with a response to the crisis in the public finances that might actually help reform the housing system too, it’s hard to see either of the other two main parties dropping their worship of home ownership and the votes that go with it.
Have your say
You must sign in to make a comment
Readers' comments (1)
ILAG | 11/07/2009 10:10 am
70% of the UK population are homeowners. Can you imagine any political party ever going for something as insane as putting CGT on first homes? They would be quite rightly slaughtered at the ballot box. As for the second suggestion, well that would hit anyone with decent sized flat or a house in the South East. Talk about a catch all.
Massive savings in public spending can be achieved via closing the tax loopholes that allow creatures like Al Fayed of Harrods to pay just £25K a year in tax through ill thought out forward tax agreements along with generally clamping down on tax havens. Then a culling of public sector quangos and the non-jobs they create such as "Diversity Advisers" along with the removal of the taxpayer funded gold plated public sector pension scheme for all non-frontline public sector employees. Finally the removal of child benefit for any more than one child, along "needs" based allocations, should greatly assist in culling the cost of the breeding-for-benefits culture as well as reducing the self-created pockets of "deprivation" that these perverse incentives inevitably lead to. The above should come to about £6bn-£10bn a year without hitting the pockets of honest working folk.
Unsuitable or offensive? Report this comment