Dr Rohen Kapur has been officially put on the ballot papers for Folkestone and Hythe Constituency running against Damian Collins, Lynne Beaumont, Claire Jeffrey, Martin Whybrow, Andy Thomas ( Andrew Thomas Emans) Seth Cruse, Harriet Yeo.
This was confirmed at 4pm on Thursday 2nd of April.
He would like to extend a big thank you to the neighbours and friends and total strangers that signed his forms.
He will be attending the Prime Time Hustings at St John's Church in Folkestone on Wednesday April 8th 2015 at 2pm Doors open at 1.30 pm and the start is prompt.
I shall be speaking first so get there in time. You won't want to miss this.
I shall be mentioning our Higher Education manifesto which will abolish tuition fees for Higher Education.
Anymore information please contact me through the link at the right hand side bar.
Showing posts with label Tax reform. Show all posts
Showing posts with label Tax reform. Show all posts
Friday, 3 April 2015
Wednesday, 11 February 2015
"What will you do to crack down on tax dodging?"
My fellow PPC Rohen Kapur and I have received identically worded emails via 38 Degrees as follows:
I'm concerned about the recent revelations that HSBC has been helping the super-rich dodge their tax, and that the government has not been acting to stop this.
As a prospective parliamentary candidate in my area, can you let me know what you pledge to do to crack down on tax dodging and prevent scandals like HSBC from happening again?
I'm also concerned that HMRC are not doing enough to investigate these cases to recoup the tax and instigate legal proceedings.
How do you intend to deal with this?
1. Yes. We, YPP, will crack down on tax avoidance. That's at the core of our manifesto.
Unlike the Conservatives or UKIP, we are not primarily funded by landowners, land speculators and the financial sector, so we are quite happy to point out that the biggest drains on the real economy are exactly those people. Let's not dwell on who funds the Lib Dems, Labour and the Greens :-)
2. Our tax policy is to reduce taxes on output, employment and profits to one single flat 20% tax on all incomes (no tax breaks, no loopholes), and to collect the other half of revenues with Land Value Tax (approx. 3% of current selling prices) and a bank asset tax. Combined with welfare simplification and reform, all working households will be thousands of pounds a year better off. The gains to our core voters will be even higher.
3. With a radical simplfication of taxes on earnings, instead of HMRC having endless different departments chasing all manner of different layers of taxes and adminstering all manner of different tax breaks and subsidies, HMRC will be able to focus all their efforts on collecting that single flat 20% without fear or favour.
In particular, we would ensure that withholding taxes are imposed on all profits siphoned out of the country via interest or royalties. And shut the revolving door between the Big Four accountancy firms and senior ranks of HMRC or Downing Street.
4. As to the banks, they lurch from one scandal to another. What have we had since the financial crisis? LIBOR rigging, PPI misselling, interest rate swaps, money laundering, tax evasion, insider trading... The list for the years leading up to the financial crisis is of course endless, in every country in the world.
Remember also that about eighty per cent of bank lending is secured on land. With a proper Land Value Tax in place to keep land prices low andstable and a hefty bank asset tax to discourage credit bubbles, banks would be cut down to size and forced to focus on proper lending to support the productive economy (i.e. finance to small businesses or short term consumer loans).
The government holds the trump card in all this. If banks do not play by the rules, their banking licences will be withdrawn. End of.
I'm concerned about the recent revelations that HSBC has been helping the super-rich dodge their tax, and that the government has not been acting to stop this.
As a prospective parliamentary candidate in my area, can you let me know what you pledge to do to crack down on tax dodging and prevent scandals like HSBC from happening again?
I'm also concerned that HMRC are not doing enough to investigate these cases to recoup the tax and instigate legal proceedings.
How do you intend to deal with this?
1. Yes. We, YPP, will crack down on tax avoidance. That's at the core of our manifesto.
Unlike the Conservatives or UKIP, we are not primarily funded by landowners, land speculators and the financial sector, so we are quite happy to point out that the biggest drains on the real economy are exactly those people. Let's not dwell on who funds the Lib Dems, Labour and the Greens :-)
2. Our tax policy is to reduce taxes on output, employment and profits to one single flat 20% tax on all incomes (no tax breaks, no loopholes), and to collect the other half of revenues with Land Value Tax (approx. 3% of current selling prices) and a bank asset tax. Combined with welfare simplification and reform, all working households will be thousands of pounds a year better off. The gains to our core voters will be even higher.
3. With a radical simplfication of taxes on earnings, instead of HMRC having endless different departments chasing all manner of different layers of taxes and adminstering all manner of different tax breaks and subsidies, HMRC will be able to focus all their efforts on collecting that single flat 20% without fear or favour.
In particular, we would ensure that withholding taxes are imposed on all profits siphoned out of the country via interest or royalties. And shut the revolving door between the Big Four accountancy firms and senior ranks of HMRC or Downing Street.
4. As to the banks, they lurch from one scandal to another. What have we had since the financial crisis? LIBOR rigging, PPI misselling, interest rate swaps, money laundering, tax evasion, insider trading... The list for the years leading up to the financial crisis is of course endless, in every country in the world.
Remember also that about eighty per cent of bank lending is secured on land. With a proper Land Value Tax in place to keep land prices low andstable and a hefty bank asset tax to discourage credit bubbles, banks would be cut down to size and forced to focus on proper lending to support the productive economy (i.e. finance to small businesses or short term consumer loans).
The government holds the trump card in all this. If banks do not play by the rules, their banking licences will be withdrawn. End of.
Wednesday, 19 February 2014
Reader's Letter Of The Day
From The Evening Standard (19 Feb 2014, page 47):
We were delighted by Danny Dorling's endorsement of a land value tax.
The Holy Grail of high wages/low house prices can be achieved by collecting taxes from the rental value of land instead of from earnings and output. Our calculations show that replacing council tax, VAT and National Insurance with a fiscally neutral Land Value Tax would leave most young couples £10,000 a year better off.
As well as reversing the rising tide of wealth inequality, such a measure would dampen the boom-bust cycle and lead to more efficient use of existing buildings.
Land Value Tax was supported by figures as diverse as Marx, Churchill and Milton Friedman. Now that corporations can shift profits between jurisdictions at the touch of a button it has more relevance than ever as land cannot be hidden abroad.
Mark Wadsworth, Young People's Party.
We were delighted by Danny Dorling's endorsement of a land value tax.
The Holy Grail of high wages/low house prices can be achieved by collecting taxes from the rental value of land instead of from earnings and output. Our calculations show that replacing council tax, VAT and National Insurance with a fiscally neutral Land Value Tax would leave most young couples £10,000 a year better off.
As well as reversing the rising tide of wealth inequality, such a measure would dampen the boom-bust cycle and lead to more efficient use of existing buildings.
Land Value Tax was supported by figures as diverse as Marx, Churchill and Milton Friedman. Now that corporations can shift profits between jurisdictions at the touch of a button it has more relevance than ever as land cannot be hidden abroad.
Mark Wadsworth, Young People's Party.
Wednesday, 24 October 2012
Wednesday, 3 October 2012
Actual rental growth verses [sic] regular pay growth
Here's a nice chart from the September Halifax house price report:
What this boils down to is that rents act exactly the same as income tax; when wages go up, rental values go up accordingly. So we could save ourselves the faff of taxing earned income and just tax rental values instead, it would be a far less economically damaging way of collecting exactly the same revenue.
What this boils down to is that rents act exactly the same as income tax; when wages go up, rental values go up accordingly. So we could save ourselves the faff of taxing earned income and just tax rental values instead, it would be a far less economically damaging way of collecting exactly the same revenue.
Wednesday, 1 August 2012
Our first leaflet
It's to be printed two-sided and folded in three, so the front page is the right hand column of page 1. Right click and download etc if you'd like to print it yourself.
Nothing is ever final, so please leave any comments and suggestions in the, er, comments.
Nothing is ever final, so please leave any comments and suggestions in the, er, comments.
Saturday, 9 June 2012
How much tax would you like to pay?
Our policy is to shift from taxing incomes and output to taxing the rental value of land. We all know that the Home-Owner-Ists always wail on about "Poor Widows In Mansion being forced to downsize", but who would be the winners under such a tax shift, and by how much?
If we wanted to replace all existing taxes (see footnote 1) with ad valorem National Domestic and Non-Domestic Rates, the tax would be seven per cent per annum on the current selling prices of UK land and buildings (see footnote 2) and the following charts show the break even points (see footnote 3).
To give an example:
- A single earner with no children who earns £16,740 a year and lives in a median value home worth (currently) of £150,000 currently pays £7,000 in tax. Some of this - the Employer's National Insurance and VAT - is stealth taxes which people aren't really conscious of, but they still reduce that person's income/spending power.
- The same single earner on the same wages in the same house would also pay £7,000 in tax (£150,000 x 7% = £10,500 NDR minus £3,500 Citizen's Income).
- So a single earner who owns a median value home who earns more than £16,740 would be better off.
- If he or she earns (say) £30,000, then the chart also gives a guide as to how much they would be better off. These calculations are tricky, but broadly speaking the gain would be between half and three-quarters of the difference between the current income and the break even point, so such a single earner would be at least £7,000 a year better off (half of £30,000 minus £16,740).
Footnote 1: Total revenues for 2012-13 according to the Public Sector Finances Database from income tax, National Insurance, VAT, corporation tax, Business Rates, Council Tax, TV licence, capital gains tax, inheritance tax, Insurance Premium Tax, Stamp Duty and Stamp Duty Land Tax, bank asset tax = £497 billion.
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Footnote 2: If we retained the extra rate of corporation tax on North Sea Oil and increased the bank asset tax to something sensible like 2%, National Domestic & Non-Domestic Rates would need to raise £447 billion. The total value of UK residential land and buildings is currently £5,600 billion, and commercial land buildings are a seventh as much again. £447 billion divided by £6,400 billion = 7 per cent*. So the tax on a home currently worth £200,000 would be +/- £14,000 a year (before deducting Citizen's Income); the tax on a supermarket currently worth £10 million would be £700,000 a year, and so on.
* Strictly speaking, Rates would apply to the "site only rental value assuming optimum permitted to use" which is more subtle concept, so the 7% figure is only a rough guide and an average. On some homes, the tax would be more than 7% and on others it would be less.
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Footnote 3: A household's current tax bill takes into account income tax, National Insurance, Working & Child Tax Credits, an estimate of 7% of earned income for VAT and 1% of the value of the current home for other taxes such as Council Tax, Stamp Duty Land Tax and Insurance Premium Tax. A household's tax bill under the system proposed here assumes that the entire welfare system is replaced with a Citizen's Income of £3,500 per annum for each adult and £1,750 for each child, which would be deducted from the households NDR bill or paid out in cash if it exceeds it.
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If we wanted to replace all existing taxes (see footnote 1) with ad valorem National Domestic and Non-Domestic Rates, the tax would be seven per cent per annum on the current selling prices of UK land and buildings (see footnote 2) and the following charts show the break even points (see footnote 3).
To give an example:
- A single earner with no children who earns £16,740 a year and lives in a median value home worth (currently) of £150,000 currently pays £7,000 in tax. Some of this - the Employer's National Insurance and VAT - is stealth taxes which people aren't really conscious of, but they still reduce that person's income/spending power.
- The same single earner on the same wages in the same house would also pay £7,000 in tax (£150,000 x 7% = £10,500 NDR minus £3,500 Citizen's Income).
- So a single earner who owns a median value home who earns more than £16,740 would be better off.
- If he or she earns (say) £30,000, then the chart also gives a guide as to how much they would be better off. These calculations are tricky, but broadly speaking the gain would be between half and three-quarters of the difference between the current income and the break even point, so such a single earner would be at least £7,000 a year better off (half of £30,000 minus £16,740).
Footnote 1: Total revenues for 2012-13 according to the Public Sector Finances Database from income tax, National Insurance, VAT, corporation tax, Business Rates, Council Tax, TV licence, capital gains tax, inheritance tax, Insurance Premium Tax, Stamp Duty and Stamp Duty Land Tax, bank asset tax = £497 billion.
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Footnote 2: If we retained the extra rate of corporation tax on North Sea Oil and increased the bank asset tax to something sensible like 2%, National Domestic & Non-Domestic Rates would need to raise £447 billion. The total value of UK residential land and buildings is currently £5,600 billion, and commercial land buildings are a seventh as much again. £447 billion divided by £6,400 billion = 7 per cent*. So the tax on a home currently worth £200,000 would be +/- £14,000 a year (before deducting Citizen's Income); the tax on a supermarket currently worth £10 million would be £700,000 a year, and so on.
* Strictly speaking, Rates would apply to the "site only rental value assuming optimum permitted to use" which is more subtle concept, so the 7% figure is only a rough guide and an average. On some homes, the tax would be more than 7% and on others it would be less.
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Footnote 3: A household's current tax bill takes into account income tax, National Insurance, Working & Child Tax Credits, an estimate of 7% of earned income for VAT and 1% of the value of the current home for other taxes such as Council Tax, Stamp Duty Land Tax and Insurance Premium Tax. A household's tax bill under the system proposed here assumes that the entire welfare system is replaced with a Citizen's Income of £3,500 per annum for each adult and £1,750 for each child, which would be deducted from the households NDR bill or paid out in cash if it exceeds it.
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Sunday, 20 May 2012
Tax reform
Yesterday's post explained why it made sense to replace the overlapping systems of means-tested benefits, contributory benefits and subsidies to land ownership with a flat rate Citizen's Income. This of course raises the question of how this would be funded (the cost of the core functions of government - law and order, defence, refuse collection and road repairs is minimal - costing barely 5% of GDP).
1. Over the past century or two it has become majority opinion that taxes should be raised by taxing earned income and output:
2. The bulk of government revenues used to be raised from the rental value of land, to eliminate the inbuilt subsidies to land ownership. Nowadays, less than a tenth of government revenues are from the rental value of land, leaving land owners to collect the subsidies, i.e. the rent they can charge - or the benefits they can enjoy without paying for them - thanks to the efforts of everybody in the productive economy and the income tax revenues spent on improvements which then push up the rental value of land etc:
3. Somebody starting out in life therefore has to pay two layers of tax - direct tax on his income, which is used to pay for the core functions of the state and other things which push up rental values; and then the rent he has to pay privately in order to be able to live somewhere - if he moves to an area with higher wages to try and earn more, nearly all the extra wages are soaked up in income tax or the higher rents in high wage areas:
4. Taxes on earned income are not only morally questionable but have huge dead weight costs. The average rate of tax on incomes, taking income tax, VAT, National Insurance, corporation tax and Working Tax Credit withdrawal into account is about fifty per cent, and this depresses the size of the economy by something like ten or twenty per cent. Taxes on the rental value of land - to claw back the inbuilt subsidies - do not have dead weight costs, so replacing taxes on income with taxes on land would allow the economy to grow by ten or twenty per cent within a few years:
5. So instead of paying two layers of tax (one publicly collected, and one privately collected), workers and businesses would only pay one layer - being the rent (which would then be clawed back from the land owner as tax). For most owner-occupier households or businesses, the tax they would pay on the land they occupy would be much the same as the tax they currently pay on their earned income. After paying for the cost of the core functions of government, the rest of the tax revenues would be repaid to everybody as a flat rate Citizen's Income (or vouchers for merit goods such as education or health) and so the median household in a median home would be a net zero taxpayer: the Citizen's Income it receives would be equal and opposite to the land value tax it has to pay:
6. So who 'loses out'? Those people who currently derive the bulk of their income (whether in cash or non-cash) from the rental value of land. They will have to return to the productive economy or accept a more modest lifestyle. Further, the purchase price of land would be significantly reduced, and ultimately, there is no reason why the purchase price of any plot of land (after deducting the cost/value of improvements thereon for which the owner has paid) should be any more than its cost of production, which is of course more or less £nil:
1. Over the past century or two it has become majority opinion that taxes should be raised by taxing earned income and output:
2. The bulk of government revenues used to be raised from the rental value of land, to eliminate the inbuilt subsidies to land ownership. Nowadays, less than a tenth of government revenues are from the rental value of land, leaving land owners to collect the subsidies, i.e. the rent they can charge - or the benefits they can enjoy without paying for them - thanks to the efforts of everybody in the productive economy and the income tax revenues spent on improvements which then push up the rental value of land etc:
3. Somebody starting out in life therefore has to pay two layers of tax - direct tax on his income, which is used to pay for the core functions of the state and other things which push up rental values; and then the rent he has to pay privately in order to be able to live somewhere - if he moves to an area with higher wages to try and earn more, nearly all the extra wages are soaked up in income tax or the higher rents in high wage areas:
4. Taxes on earned income are not only morally questionable but have huge dead weight costs. The average rate of tax on incomes, taking income tax, VAT, National Insurance, corporation tax and Working Tax Credit withdrawal into account is about fifty per cent, and this depresses the size of the economy by something like ten or twenty per cent. Taxes on the rental value of land - to claw back the inbuilt subsidies - do not have dead weight costs, so replacing taxes on income with taxes on land would allow the economy to grow by ten or twenty per cent within a few years:
5. So instead of paying two layers of tax (one publicly collected, and one privately collected), workers and businesses would only pay one layer - being the rent (which would then be clawed back from the land owner as tax). For most owner-occupier households or businesses, the tax they would pay on the land they occupy would be much the same as the tax they currently pay on their earned income. After paying for the cost of the core functions of government, the rest of the tax revenues would be repaid to everybody as a flat rate Citizen's Income (or vouchers for merit goods such as education or health) and so the median household in a median home would be a net zero taxpayer: the Citizen's Income it receives would be equal and opposite to the land value tax it has to pay:
6. So who 'loses out'? Those people who currently derive the bulk of their income (whether in cash or non-cash) from the rental value of land. They will have to return to the productive economy or accept a more modest lifestyle. Further, the purchase price of land would be significantly reduced, and ultimately, there is no reason why the purchase price of any plot of land (after deducting the cost/value of improvements thereon for which the owner has paid) should be any more than its cost of production, which is of course more or less £nil:
Saturday, 19 May 2012
Welfare Reform
1. People clearly have different levels of income and assets and the welfare system is an attempt to redistribute this somewhat, or to alleviate poverty:
2. For some reason, people like 'contributory benefits', where those who have earned most and paid most taxes are paid higher old age pensions or seen as more deserving recipients of unemployment benefit, despite this is just like a belated tax rebate and it would have been better to simply not collect the tax in the first place. Most pernicious of all are subsidies to certain assets, in particular land ownership (manifested with things like cash subsidies for buying a home; Housing Benefit payments which only benefit landlords in the long run and the fact that land ownership generally is nothing more than a state-sanctioned transfer of wealth, i.e. a subsidy):
3. Then there is a strange coalition of a) Socialists who think that people with low or no incomes deserve more than those who have (or have had) higher incomes and have built up some savings; and b) right wingers who like means-testing because they think it saves money (what they don't realise is that means testing is like a stealth tax on incomes and non-land assets which are taken into account for means testing):
4. So as things stand in the UK, we have a mish mash of subsidies to land ownership, means tested and contributory benefits, so the Socialists, right wingers, authoritarians, bureaucrats and land owners are all happy. The effect of having two overlapping and parallel systems means that people actually receive pretty much the same whatever their level of income or assets (ignoring the net subsidies to land ownership which are lightly taxed and not taken into account for most means-testing):
5. So why not merge the two systems with all the huge administration costs, fraud and error and traps and loopholes with a flat rate Citizen's Income, payable in cash. The cost of which can be largely funded by clawing back the subsidies to land ownership, i.e. by imposing a land value tax such as Domestic Rates, which would mean that the Citizen's Income received by a median household in a median home would be equal and opposite to the Domestic Rates due on that home?
2. For some reason, people like 'contributory benefits', where those who have earned most and paid most taxes are paid higher old age pensions or seen as more deserving recipients of unemployment benefit, despite this is just like a belated tax rebate and it would have been better to simply not collect the tax in the first place. Most pernicious of all are subsidies to certain assets, in particular land ownership (manifested with things like cash subsidies for buying a home; Housing Benefit payments which only benefit landlords in the long run and the fact that land ownership generally is nothing more than a state-sanctioned transfer of wealth, i.e. a subsidy):
3. Then there is a strange coalition of a) Socialists who think that people with low or no incomes deserve more than those who have (or have had) higher incomes and have built up some savings; and b) right wingers who like means-testing because they think it saves money (what they don't realise is that means testing is like a stealth tax on incomes and non-land assets which are taken into account for means testing):
4. So as things stand in the UK, we have a mish mash of subsidies to land ownership, means tested and contributory benefits, so the Socialists, right wingers, authoritarians, bureaucrats and land owners are all happy. The effect of having two overlapping and parallel systems means that people actually receive pretty much the same whatever their level of income or assets (ignoring the net subsidies to land ownership which are lightly taxed and not taken into account for most means-testing):
5. So why not merge the two systems with all the huge administration costs, fraud and error and traps and loopholes with a flat rate Citizen's Income, payable in cash. The cost of which can be largely funded by clawing back the subsidies to land ownership, i.e. by imposing a land value tax such as Domestic Rates, which would mean that the Citizen's Income received by a median household in a median home would be equal and opposite to the Domestic Rates due on that home?
Wednesday, 16 May 2012
Policy statements: Same-sex marriage, minimum alcohol pricing
We see absolutely no reason why UK legislation refers to marriages between gays and lesbians as 'civil partnerships' but then treats them, as far as we can see, in exactly the same way.
As far as we are concerned, the term 'civil partnership' can be abandoned, and whatever statutes there are covering marriages can be amended to make it clear that a marriage can be between any two consenting adults, male, female or otherwise. Stonewall have already published their own draft Extension of Marriage to Same-Sex Couples Bill, which seems perfectly sensible.
Their Section 3 seems far too timid to us. Agreed, all religions except the Church of England and the Church of Wales are ultimately private organisations (most of them exhibiting various degrees of homophobia) which are not under the control of the UK government which has no right to dictate terms, but those two Churches are official, state religions (their bishops sit in the House of Lords; coronations etc are held in a Church of England cathedral) and there is no reason why they cannot be told to name at least a certain number of churches in which same-sex marriages can and will be held, should the couples so wish.
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We are appalled by the Scottish government's imposition of a minimum price for alcohol of 50p per unit and mumblings by the UK government that the same will be imposed in England and Wales.
Firstly, there is no binge-drinking epidemic; even if there were, such a price hike will do absolutely nothing to reverse it; and finally, the only real beneficiaries of this will be the large supermarket chains who will be able to increase their prices accordingly.
Alcohol duties themselves push up the price of booze. These are not the worst kind of taxes, but they - especially when combined with VAT on top (a tax we would seek to scrap as soon as possible) - are pretty much at the upper limit of what can be collected. Any higher and all we see is more smuggling and illicit distilleries with no further increase in revenues.
As far as we are concerned, the term 'civil partnership' can be abandoned, and whatever statutes there are covering marriages can be amended to make it clear that a marriage can be between any two consenting adults, male, female or otherwise. Stonewall have already published their own draft Extension of Marriage to Same-Sex Couples Bill, which seems perfectly sensible.
Their Section 3 seems far too timid to us. Agreed, all religions except the Church of England and the Church of Wales are ultimately private organisations (most of them exhibiting various degrees of homophobia) which are not under the control of the UK government which has no right to dictate terms, but those two Churches are official, state religions (their bishops sit in the House of Lords; coronations etc are held in a Church of England cathedral) and there is no reason why they cannot be told to name at least a certain number of churches in which same-sex marriages can and will be held, should the couples so wish.
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We are appalled by the Scottish government's imposition of a minimum price for alcohol of 50p per unit and mumblings by the UK government that the same will be imposed in England and Wales.
Firstly, there is no binge-drinking epidemic; even if there were, such a price hike will do absolutely nothing to reverse it; and finally, the only real beneficiaries of this will be the large supermarket chains who will be able to increase their prices accordingly.
Alcohol duties themselves push up the price of booze. These are not the worst kind of taxes, but they - especially when combined with VAT on top (a tax we would seek to scrap as soon as possible) - are pretty much at the upper limit of what can be collected. Any higher and all we see is more smuggling and illicit distilleries with no further increase in revenues.
Saturday, 7 April 2012
National Domestic Rates
1. Economists down the ages have all established that taxes on the rental value of land are the 'least bad' taxes because they have no negative impact on economic activity and do not push up the price of goods and services; reduce business activity and employment; or eat into truly earned income or truly private wealth.
2. On a moral/philosophical level, taxes on the site rental value of land are actually just a user charge for the net benefits which accrue to the owner of any site because of what 'everybody else' is doing (or not doing) in the vicinity. If the owner chooses to rent out land which he owns, then he can collect the value of those benefits from the tenant as rent. Quite clearly, the benefits which accrue to the owner of a flat overlooking St James's Park, London are far greater than the benefits to the owner of a flat overlooking St James' Park football stadium, Newcastle; and more benefits accrue to the owner of that flat than to the owner of one overlooking the town gas works. The owner of each home has absolutely no input or involvement into creating this value, and so it is truly unearned income, the owner is benefiting from national wealth - and it is the rental value of this wealth which we could claw back to pay for national expenditure.
3. The UK already has a system of taxing the rental value of commercial land and buildings, called National Non-Domestic Rates ('Business Rates'), this is flawed in that it taxes the rental value of the owner's own improvements (the buildings) as well the rental value of the site (the total rental value minus a reasonable return on bricks and mortar) but this is a minor issue. The only major change we would make to National Non-Domestic Rates is that undeveloped and derelict sites would be subject to the same tax bill as similar developed sites in the area to encourage development.
4. There is no reason why we can't reintroduce such a system for residential land and buildings and reduce taxes on earned income accordingly. By taxing incomes to pay for public services and reducing taxes on residential property, older generations (and landowners and banks) have ensured that there is a one-way flow of wealth away from young people and the productive economy towards themselves. Although the middle aged pay as much, or possibly more, income tax than young people, most of that spending flows back to them in terms of higher house prices.
5. Young people end up paying twice over - they pay for the cost of public services via income tax and then they pay again for the value when they rent or buy a home. The purists argue that the best kind of tax is Land Value Tax, "a tax on the annual site-only rental value of each plot of land, assuming optimum permitted use", which is a bit of a mouthful. In practice, it does not matter what we call it, and neither does it really matter how accurately it is calculated, provided it is broadly proportional to the value of the extra benefits which each home owner or landlord receives by owning land at that particular location.
6. At its simplest, we could just work out the current rental value of all homes using HM Land Registry's database of fourteen million sales since 2000 (the experience of Wales and Northern Ireland where revaluations for Council Tax/Domestic Rates were carried out in 2005 shows that this can be done quickly, cheaply and accurately), multiple prices by 4% for gross rental value and deduct a few thousand for annual running costs. We then allocate each home to a 20% wide band, staring with Band A (for homes worth £50,000 - £60,000) on which the annual NDR bill is (say) £1,000 a year all the way up to Band Z (for homes worth over £5 million) on which the annual NDR bill is £200,000. The median bill would be £6,000 - £7,000 and three-quarters of homes would have a bill of £9,000 or less.
7. The total revenues which could be raised in NDR at that level would be £220 - £250 billion a year, which is enough revenue to replace National Insurance and Value Added Tax and reduce income tax/corporation tax to a flat ten percent (combined with other tax changes).
8. An issue that a tax reformer always faces is that people do not realise how much tax they actually pay - the marginal rate on earned income, once you include benefit withdrawal is far higher than fifty percent. With a system of NDR and a flat income tax of ten percent, an average first time buyer couple on a median income buying a median home would end up paying about £8,000 less in tax every year.
9. By the same token, those people who have ridden the house price bubble and earn a low income compared to the current value of their home would end up paying more in tax, but so what? We are expecting no more of them than they currently expect of younger people. And yes, we are aware that the Baby Boomers will squeal about the "asset-rich, cash-poor" but this is crocodile tears because they are looking forward to inheriting the houses their parents live in and want it to rise in price as much as possible.
10. So we could either exempt pensioners, in which case 'everybody else' pays a bit more, or even better, why not pass the legal liability to paying the tax to those who stand to inherit it, with any unpaid balance to be rolled up and repaid on the death of the current owner?
2. On a moral/philosophical level, taxes on the site rental value of land are actually just a user charge for the net benefits which accrue to the owner of any site because of what 'everybody else' is doing (or not doing) in the vicinity. If the owner chooses to rent out land which he owns, then he can collect the value of those benefits from the tenant as rent. Quite clearly, the benefits which accrue to the owner of a flat overlooking St James's Park, London are far greater than the benefits to the owner of a flat overlooking St James' Park football stadium, Newcastle; and more benefits accrue to the owner of that flat than to the owner of one overlooking the town gas works. The owner of each home has absolutely no input or involvement into creating this value, and so it is truly unearned income, the owner is benefiting from national wealth - and it is the rental value of this wealth which we could claw back to pay for national expenditure.
3. The UK already has a system of taxing the rental value of commercial land and buildings, called National Non-Domestic Rates ('Business Rates'), this is flawed in that it taxes the rental value of the owner's own improvements (the buildings) as well the rental value of the site (the total rental value minus a reasonable return on bricks and mortar) but this is a minor issue. The only major change we would make to National Non-Domestic Rates is that undeveloped and derelict sites would be subject to the same tax bill as similar developed sites in the area to encourage development.
4. There is no reason why we can't reintroduce such a system for residential land and buildings and reduce taxes on earned income accordingly. By taxing incomes to pay for public services and reducing taxes on residential property, older generations (and landowners and banks) have ensured that there is a one-way flow of wealth away from young people and the productive economy towards themselves. Although the middle aged pay as much, or possibly more, income tax than young people, most of that spending flows back to them in terms of higher house prices.
5. Young people end up paying twice over - they pay for the cost of public services via income tax and then they pay again for the value when they rent or buy a home. The purists argue that the best kind of tax is Land Value Tax, "a tax on the annual site-only rental value of each plot of land, assuming optimum permitted use", which is a bit of a mouthful. In practice, it does not matter what we call it, and neither does it really matter how accurately it is calculated, provided it is broadly proportional to the value of the extra benefits which each home owner or landlord receives by owning land at that particular location.
6. At its simplest, we could just work out the current rental value of all homes using HM Land Registry's database of fourteen million sales since 2000 (the experience of Wales and Northern Ireland where revaluations for Council Tax/Domestic Rates were carried out in 2005 shows that this can be done quickly, cheaply and accurately), multiple prices by 4% for gross rental value and deduct a few thousand for annual running costs. We then allocate each home to a 20% wide band, staring with Band A (for homes worth £50,000 - £60,000) on which the annual NDR bill is (say) £1,000 a year all the way up to Band Z (for homes worth over £5 million) on which the annual NDR bill is £200,000. The median bill would be £6,000 - £7,000 and three-quarters of homes would have a bill of £9,000 or less.
7. The total revenues which could be raised in NDR at that level would be £220 - £250 billion a year, which is enough revenue to replace National Insurance and Value Added Tax and reduce income tax/corporation tax to a flat ten percent (combined with other tax changes).
8. An issue that a tax reformer always faces is that people do not realise how much tax they actually pay - the marginal rate on earned income, once you include benefit withdrawal is far higher than fifty percent. With a system of NDR and a flat income tax of ten percent, an average first time buyer couple on a median income buying a median home would end up paying about £8,000 less in tax every year.
9. By the same token, those people who have ridden the house price bubble and earn a low income compared to the current value of their home would end up paying more in tax, but so what? We are expecting no more of them than they currently expect of younger people. And yes, we are aware that the Baby Boomers will squeal about the "asset-rich, cash-poor" but this is crocodile tears because they are looking forward to inheriting the houses their parents live in and want it to rise in price as much as possible.
10. So we could either exempt pensioners, in which case 'everybody else' pays a bit more, or even better, why not pass the legal liability to paying the tax to those who stand to inherit it, with any unpaid balance to be rolled up and repaid on the death of the current owner?
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