The Vince Cable idea about a “Mansion Tax” has had some press again and the debate has raged around the usual issues. But this is a sawn off version of a general property tax which deals only with the obvious high end of the issue.
This blog has discussed before about property tax on the basis of if a government is unable to raise enough tax through alternative fiscal means then some sort of property tax might have to be imposed if it could be made effective.
Such a tax is not a “cure all” for such problems and has disadvantages of its own. The prime advantage is that the property exists, can be located is not moveable and assessed accordingly and used as the basis for taxation.
The variation on this which attracts probably wider support is the Land Value Tax again on the basis that the land cannot be moved and can be assessed from a range of existing figures and valuations.
Notably it would help where public expenditure led to a major increase in property and land values arising from decisions or projects that clearly benefited some districts. Examples cited are Crossrail and other transport improvements in the South East, and the Northern Line extension to Battersea.
The question of property has been given more urgency following the row over stamp duty payable on transactions now being avoided by many of the very wealthy who can find and put in place types of ownership that pay far less.
A good deal of Inheritance Tax is lost also by the wealthy and others making legal arrangements of one sort or another, such as family trusts or simply handing over ownership at the right time.
We already have a property tax of sorts in the shape of the council tax. This poses an interesting question. This tax is tapered in such a way that the middling or poorer sections of the community pay proportionately more than those with high value properties.
But whether the people in the high value properties enjoy more or less value from the actual services provided by councils depends on circumstances. There is a school of thought that people should pay more for many services as a price rather than through tax and local government provision.
If an attempt is made to “individualise” the burden of local taxes then this becomes a poll tax. Those around at the time will recall the reaction that Mrs. Thatcher and the Conservative government got when they tried it.
The big mistake there was to keep the very large education budgets in the poll tax rather than take them out leaving only a much smaller level of poll tax. This was transformed into the present council tax. But there is a burgeoning problem with council tax that is just surfacing.
That is that under the present arrangements many of the wealthy can simply avoid paying it and councils can do little or nothing about it. This is done by ownership taken off shore into untraceable companies or holdings.
It is all yet another legacy from a long history of bungling and short term compromises that is very difficult to sort out with a political media elite who are heavily invested in property.
In the distant past the great majority of people rented and simply moved on when they want to and to properties they could afford. If they found they could not then they moved on again.
Some without paying their rents, in fact some urban districts were known as “The Land Of The Moonlight Flits” where a family would load a barrow or two with what they had and move to wherever they could find another landlord.
If our present fiscal situation is not sustainable sooner or later land or property will have to become, again, a major feature of raising revenue. This is not going to be a happy or easy business.
Where can I hire a barrow from?