| Topic: | Re:Re:Re:Osbourne's Mansion Tax | |
| Posted by: | Lorne Gifford | |
| Date/Time: | 02/05/15 21:41:00 |
| Tom, given the scarcity of higher end house price information it is not possible to calculate the average price of all houses in the £3m plus range. The average value I used for £2m plus houses is available on the internet. You could with justification reduce the loss of revenue by 44%, ie ignore anything less than £3m. £2.3bn then becomes £1.2bn. But if you're going to start including these second order effects then you also need to do so elsewhere. For example 2.5% interest becomes 1.5% net interest after deduction of the tax you need to pay on it, so likely devaluation becomes around 40% (what is was in Greece incidentally). And if a £3.5m house is now worth £2.5m then today's £2.5m house is reduced in value to say £2m. A £2m house then is reduced in value to say £1.7m, and a £1.7m house is reduced to £1.5m, etc. The second order effects are open to interpretation and so very easy to pick holes in. Overall it is far better to keep the calculation as clear and simple as possible. So, Yes, my calculation is completely accurate. I'd point out here that Ed Balls hasn't actually shown any calculations at all. He has just magic'd up a figure and said that's what he'll get. If he has a calculation then it's been conducted in a vacuum and he's not showing it because he knows it's an utterly false result. Even the number of houses in this country that are valued at £2m isn't known. Some references say 155,000 whilst others say less than 60,000. The lower reference interestingly said there are 12 'mansions' in Wales, not 12,000 but 12. That's less than the number of castles! I've used 100,000 because that's a good median value and has the most number of references that back it up. What I've done is to show the mansion tax is a false revenue raiser. It simply doesn't work on the basic financials. Now I could have started on a different tact, one perhaps about the morality of taxing prudence. For instance why not have a yacht tax instead as yacht purchases are made with disposable income and there are a lot of yachts in this country. Or how about a new car tax, as no one needs to buy a new car when there are plenty of decent second hand ones. Holiday tax perhaps? Actually I like the idea of a yacht tax as there are a lot of them in Scotland so the revenue is more evenly spread. Yes, I agree the rise in stamp duty is a nasty elephant, but I don't see Labour suddenly removing it if they come to power as governments have a tendency to increase tax rates and capture numbers rather than reduce them. Mansion tax, like stamp duty is likely to follow this route if it is introduced. £2m starting level at first, but anyones guess what it'll be in a few years. Actually best guess is £250k because that's what Greece thought they could get away with. |