Jim Vine
Recent activity
Comments (1)
-
Comment on: Turning a blind eye
@ Jules Birch
Thanks for covering the report, and for starting off this lively discussion! You are right that we rely on the data from the UK Housing Review. Roll-over relief is a factor that we count against the potential viability of CGT on main homes. If it were introduced there would almost certainly be roll-over relief, but if you did that you would quickly find that you are only charging CGT on households trading down - and if we want to make better use of the housing stock we have you want to put as few barriers as possible in the way of people trading down from big homes when the family flies the nest. As an alternative we suggest looking at applying an alternative to both the PRS and owner occupation, for example taxing capital values on an annual basis in some way. If you go down that route, the rate of the new tax (and hence the revenue raised from it) could be set at whatever level was deemed appropriate - if, say, you scrapped the existing capital taxes that are paid on a transactional basis (CGT in the PRS, and stamp duty across sectors) and replaced them with an annual capital tax, then you could decide whether to raise the same as the taxes you've scrapped, a bit more, or a bit less.
---
@ Anonymous (1:39pm)
A tax on imputed rents is definitely very hard to get your head around, and that's one of the biggest problems with it. It makes sense from an economic and logical perspective, but that doesn't necessarily make it politically feasible if people don't understand it. Here's how we try to explain it in the report:
"A tax on imputed rents reflects the fact that in owner occupation the landlord and tenant are effectively conflated into one individual. This can be understood by way of an example: consider two people, A and B, who each own a property. If A lives in B’s property, and B lives in A’s, each would pay rent to the other (and that rent would be taxable income). But if A and B are both owner occupiers, no money changes hands; there are still two owners and two occupiers, but there are no actual transactions. The equivalent transactions are A paying rent to A and B paying rent to B. The amount that would have been paid had the owner and occupier been different people is the imputed rent."
---
Of course in both of these areas there is more work to be done, around understanding what the best mechanisms would be and indeed around what measures are politically feasible (which includes their being comprehensible to the average taxpayer).
But even if change is some way off, it is at least helpful that more people are aware that owner occupation does get this beneficial treatment in taxation. It opens up a debate about whether it is desirable that owner occupiers should be favoured in this way, and perhaps takes some of the heat out of discussions about the other types of support with housing costs that the state provides more visibly.
If anyone is interested in reading further, our whole spending review submission is available for free download from our website: http://www.bshf.org/published-information/publication.cfm?lang=00&thePubID=8AF35100-15C5-F4C0-99BE979B7ACACA24
Discussions (0)
Jim Vine has not added any discussions yet.
Posts (0)
Jim Vine has not added any posts yet.