| Topic: | Re:Re:CEBR figures and effects of a Mansion Tax | |
| Posted by: | Tom Pike | |
| Date/Time: | 01/05/15 10:00:00 |
| Lorne, sorry, your calculations are clearly wrong. You've misapplied the averages from one set to both and have inconsistently applied a discount rate. You certainly have to divide by the annual rate that the tax is collected, but you also have to take into account that after the first year the loss of revenue is in the future. The CEBR figures are miles away from yours, and a change in the stamp duty doesn't come close to explaining the difference. And the increase in stamp duty actually brings the current taxation regime much closer to proposed mansion tax, and so the marginal effect of introducing it is decreased. On those grounds the CEBR figures will be an overestimate of the revenue lost since the new rate was introduced. There's a huge difference between suppressing demand at the high end, as the recent increases in stamp duty will have done, and a wholescale price collapse. There's just no current evidence for the scenario you outline. What's much more likely to cause a crash, if history is any guide, is a continuous ramping up of house prices. The error in your calculations can be most obviously seen as it leads to a mansion tax producing a lower rate of overall taxation for those who pay it, taking into account the reductions you predict in stamp duty and inheritance tax. That would imply firstly that the strongest advocates of a mansion tax should be those who are going to pay it, as their overall tax bills will be cut. Secondly, it leads to a contradiction, as if the overall tax bill on these properties is cut, their value should rise not fall as your calculations assume. |