| Topic: | Re:Re:Re:Re:Re:Re:David McLoughlin has a direct line into Ruth Cadbury | |
| Posted by: | Lorne Gifford | |
| Date/Time: | 30/04/15 14:28:00 |
| Thank you Guy for your response. I PM'd David and he has said he will pass the question to Ruth, so I will await a response. In answer to your questions here is what I said to David: There are numerous references available on the internet, perhaps the easiest of which is the CEBR Economic Review on Mansion Tax. Although the CEBR review was conducted before the raising of stamp duty rates, it nicely shows the consequences of introducing this type of property value tax on the value of homes. The mathematics are also very simple and straightforward and are repeated below for your information: £3.5m is the average mansion value today (ie the average of all property valued at more than £2m). Of around 100,000 mansions, 44% are in the value range £2m to £3m and 56% are in the £3m+ range. 44,000 homes at £2,500 per year each equals £110m in revenue. Remaining £1.1bn to be collected from the other 56% of homes requires an average bill per year of £1.1bn/56,000 = £19,600. Present cost of a £20k into perpetuity annual tax at the current bank interest rate of 2.5% = £1m Value of a £3.5m mansion after introduction of the new tax = £2.5m Stamp duty paid on £3.5m value = £335,000 Stamp duty paid on £2.5m value = £214,000 Loss of stamp duty revenue = £121,000 100,000 'mansions' in this country and average ownership time is 10 years between selling so overall stamp duty loss of revenue each year is 100,000 x 1/10 x 121,000 = £1.2bn Inheritance tax on current £3.5m value = £1.3m Inheritance tax on new £2.5m value = £870k Loss of revenue on death of owner = £430k 100,000 'mansions' and their owners die on average once every 40 years (you only own a mansion for around half your life) so inheritance tax loss of revenue each year is 100,000 x 1/40 x 430,000 = £1.1bn Overall loss of revenue from introducing mansion tax is therefore £1.2bn + £1.1bn = £2.3bn As you can see, the numbers simply don't work out as showing any kind of benefit at all to overall tax revenue. All that Mansion tax does it to evaporate £1m of value from every typical mansion. The evaporation of wealth is the downside of the free creation of wealth that our FIAT monetary system allows. It is quite simply the worst kind of economic policy possible. |