Topic: | Re:CEBR figures and effects of a Mansion Tax | |

Posted by: | Lorne Gifford | |

Date/Time: | 01/05/15 08:27:00 |

Hi Tom, firstly thank you for taking the time to look at the numbers and check the references. Too many people these days just look at the headline numbers and make their judgement on that - a typical headline being 'mansion tax will raise £1.2bn for the NHS'. So to answer your comments: 1) Yes, it is a simplified calculation based solely on the 'average' mansion that is today valued at £3.5m. The drop in value of this mansion is correct and a similar percentage drop in values will be felt in all 'mansions'. This is backed up by the Greek example where mansion tax immediately devalued all affected properties by 40%. Interestingly it's also backed up by what's happening on my street. There is a house that went on the market at £4.5m about the same time all the talk of mansion tax came it. Incidentally it really is a mansion, indoor pool, plenty of bedrooms, probably even 2 kitchens, but that's Brentford for you where you get double what you can in Chiswick for the same money. 6 months later the house is now down to an asking price of £3.5m and isn't shifting. Just the threat of a mansion tax has taken £1m off it. What I'm saying is the devaluation is very real, it happened elsewhere and it's happening here. It is the evaporation of hard earned wealth from this country so that Labour can play politics. 2) You'll see from the numbers that 1/10th of property is generally sold every year and that in calculating the loss of revenue I've only used the number of houses that will be sold in an individual year. Discounting future loss of revenue is therefore not applicable, as the numbers only deal with the present time. The loss of revenue per year really is £2.3bn. 3) The CEBR analysis was performed before the recent rise in stamp duty to 12%. Applying the new percentages to their calculation gives exactly the numbers I have shown. 4) There is no way of getting around £1.2bn take away £2.0bn (or £2.3bn to be more accurate) does not produce any revenue at all. 5) Downward pressure on house prices is a very nice way of saying a collapse in all property value and resulting deflation of the economy. Again, citing the Greek example, the unforseen consequences tend to dominate. We have a FIAT monetary system; where the value of currency is not backed up by central bank wealth, but is purely based on it's perceived value. FIAT systems, much like the cars I guess, are very fragile and inherently unstable. A sudden 40% drop in all property (from extending mansion tax into the general housing population) is exactly the kind of thing that collapses it. In this respect Greece is lucky in that their system uses Euro's, which are also a FIAT currency, but are spread over a much wider population. This isn't the case in the UK. It really is the worst of all possible economics. |

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