changed council tax to property tax

Proposer
cyanc
State

Rejected

Vote Score

-1

Age

2249 days


@cyanc edited manifesto/housing.md - about 6 years ago

Council Tax

Investigate a fairer system than the current 'band' system of council tax.

Council tax will be discontinued and replaced with a 'Property tax', set at 0.5% of the property's value and payable by the owner of the property whether it is occupied or not. The property's value will be calculated by an initial valuation, and then rise or fall annually in line with the ONS regional house price index (HPI).

Housing Benefit

cyanc

@cyanc - about 6 years ago

Council tax is rubbish in so many ways it's not worth listing them here!

The idea of this change is that it acts as a counterbalance to above inflation property price rises (which increase inequality by favouring asset owners, and rising faster than working people can earn/ save).

Methodology: The average house price was £260k as of April 2014 - http://www.ons.gov.uk/ons/rel/hpi/house-price-index/april-2014/stb-april-2014.html#tab-House-Price-Index-UK-Summary

0.5% of the average house price is around £1300, which is about the same as the average council tax (Band D average way £1400 this year). 0.5% of a £1m house would be around £5k per year. Higher % levies could be applied to higher value properties (e.g. 1% over £1m, 2% over £2m - negating the need for a mansion tax).

If the value of your house rises you pay more, if it falls you pay less. The owner, rather then the occupier pays, this means Landlords would be liable to paying on rental properties (so would need to pass costs into the rent) but the tax would be levied whether or not the property is occupied - discouraging vacancy/ hoarding.

Reasoning: It will act as a brake on above wage-inflation house price rises by taking money out of the economy during a house price boom, and cement housing booms as a bad thing in the public consciousness, as well as acting as a cushion and stimulus in the event of a house price crash.

It will also mean that if the public pay (via taxation) to improve an area, those benefiting will contribute to it on an ongoing basis. e.g. if building Crossrail results in a new station near your house providing a direct commuter route into the City and your house rises in value, you contribute. At the moment all tax payers (including renters) pay for improvements like Crossrail, and only the property-owner benefits from the resulting property price rises.

Problems: Who gets this money? If the local council continue to get it, rich areas will still collect more tax than poor areas. However, if it goes to central government, then how do local councils receive their funding?

Floppy

@Floppy - about 6 years ago

I think this idea. Regarding the problems, presumably you could keep the local payment aspect, and also keep the subsidy payments that already exist between high and low value areas? I'm guessing @philipjohn will have many thoughts on this, which I look forward to. I'm ✋ for now, purely based on lack of understanding. Will probably vote yes after a bit more debate.

PaulJRobinson

@PaulJRobinson - about 6 years ago

What would you say is the advanatge of your proposal over (say) keeping Council Tax but increasing the number of tax bands beyond H (all the way to Z if necessary) and recalibrating it to continually reflect current prices (rather than sticking to 1991 prices)? Wouldn't that more simple change to the current system have roughly the same effect as your proposal?

WIth regards your stated 'problems' you sate that "rich areas will still collect more tax than poor areas" but the reality is that rich areas (eg Surrey where I live) don't get to keep all the Council Tax they raise. If we did then everyone is Surrey could get a 50% cut in Council Tax without it affecting the amount of income the Councils here receive. So there already (quite rightly) a substantial amount of redistribution orchestrated by central government.

cyanc

@cyanc - about 6 years ago

You'll notice a theme in my suggestions - reducing inequality. Currently, inequality is encouraged through so many different policies that it is unbelievable. Property-owners benefitting disproportionately from public investment is an obvious one. There are various ways of mitigating this, I've suggested a property tax here, but there other ways of tackling it.

cyanc

@cyanc - about 6 years ago

@PaulJRobinson The only advantage of a percentage of total value over banding is that it is a sliding scale vs a stepped scale. The idea of the name change to a "Property tax" is to reflect that it is levied on the owner of the property rather than the occupier. Apart from discouraging vacancy represents a cultural difference in shifting the tax to the 'ownership' of an asset rather than the 'user' of an asset. In reality the occupier pays even if they are a tenant, via rent, but it applies a direct cost on the speculation of finite resources. This is important if we are going to recognise that speculation is a key factor in increasing and cementing inequality and exclusion (and not just in housing).

cyanc

@cyanc - about 6 years ago

I should also add that a tax levied on the owner of a property (rather than its occupier) gets rid of the shenanigans with non-doms and off-shore companies avoiding council tax by obfuscating occupancy. It doesn't matter if you are based in Monaco and fly in once a year, or that your property was bought through an off-shore company. The tax is due on the property, to be annually paid to the UK government by its legal owner.

PaulJRobinson

@PaulJRobinson - about 6 years ago

I'm coming round to this idea. On your point above, it doesn't prevent the non-dom in Monaco from declaring that his company that is registered somewhere else is the owner and coming up with all sorts of clver ways of not paying it himself. But yes in principle I can see the merits of this proposal.

with kind regards, Paul Robinson

about.me/pauljrobinson

On 19 June 2014 12:58, Cyan [email protected] wrote:

I should also add that a tax levied on the owner of a property (rather than its occupier) gets rid of the shenanigans with non-doms and off-shore companies avoiding council tax by obfuscating occupancy. It doesn't matter if you are based in Monaco and fly in once a year, or that your property was bought through an off-shore company. The tax is due on the property, to be annually paid to the UK government by its legal owner.

— Reply to this email directly or view it on GitHub https://github.com/openpolitics/manifesto/pull/192#issuecomment-46551662 .

cyanc

@cyanc - about 6 years ago

It doesn't really matter who actually pays the tax, if it is an off-shore special investment vehicle or an individual, it owes the tax, and if it does not pay it will be breaking UK law. Currently it is legal to avoid council tax by not having an occupier.

It may not be possible to recover unpaid tax from a shady off-shore investment vehicle directly, but it will be very difficult for that vehicle to sell its UK assets when it has a charge against it for unpaid tax. Ultimately assets can be seized to recover unpaid debts.

philipjohn

@philipjohn - about 6 years ago

This is sensible, and I would support it but I think we've already got it covered ;)

In the manifesto already we have the replacement of Capital Gains Tax with an Asset Tax. In effect, this does exactly the same, as it levies a tax on the owner of assets, including property.

What your proposal has highlighted of course is that we have a contradiction in the manifesto - we probably should have abolished council tax too, and have that revenue shift to our Asset Tax.

On the question of who gets the money, the asset tax is very much looking like a HMRC responsibility. Council tax is already redistributed, and in #74 we have the idea of a "citizens premium" (similar idea to the pupil premium), so I think it's reasonable to say that central gov't, via HMRC, gets the (Asset Tax) revenue and then redistributes based on a citizens premium. A benefit of this is that local authorities no longer have the administrative burden of collecting and distributing taxes.

cyanc

@cyanc - about 6 years ago

Wow! I didn't spot that asset tax. I'd say its the other way around, you need to remove or completely change that proposed asset tax - it's completely regressive as you have written it. I will give you a scenario:

A buy-to-let slumlord buys up 30 properties to rent out to the poor. He/she takes out huge mortgages to pay for them, but that's okay because the state will cover the tenants' housing costs should they earn too little to pay them. Meanwhile the landlord can avoid all asset taxes because they have huge mortgages they can offset against. The income from the tenants comes rolling in.

Conversely, someone who has worked their life to pay off their mortgage reaches retirement and finds they are burdened with an asset tax because their house is worth more than £350k. In fact the best financial advice in that situation would be to re-mortgage - obtain more debt.

One of the main features of our post financial crisis world is the rise of inequality on the back of debt. The 1% (not to be confused with the 0.01%) are also the most indebted, the bailout of the banks protected the over-leveraged - both individuals and institutions - at the expense of the productive. We need to return to a situation where productive activity is rewarded over indebtedness and speculation. The asset tax that you have proposed promotes the opposite.

That's not to say that there shouldn't be asset/ wealth taxes, there should. But it should not be able to be offset by debt.

philipjohn

@philipjohn - about 6 years ago

I'd be happy to revisit the off-setting bit as I wasn't completely sure of that when I wrote it, and you make a very valid point. How would you feel about the asset tax (as a replacement for council tax) then?

philipjohn

@philipjohn - about 6 years ago

By the way, the offset was my attempt at taking average single home owners out of asset tax, so that it's only a tax on those owning large, or many, properties. Still interested in achieving that aim.

cyanc

@cyanc - about 6 years ago

Starting with your second point, if you take single homeowners out of the asset tax, you will still need a council/ property tax as the vast majority of people own either 0 or 1 homes.

There's a fundamental problem with the concept of an asset tax.

Asset taxes cannot be applied to companies for the obvious reason that assets are not directly related to profits or turnover. A specialist engineering firm would have many more high-value assets than a call centre for example. So asset taxes can only be applied to individual's assets. This raises very big problems that basically make a generic asset tax unworkable.

First lets start with our slum landlord. If they start a property company and put their property assets into that company. Whey hey, no asset tax.

Next, let's move onto non-property assets, shares for example. Shares are very easy to keep off-shore. It is very straightforward to keep assets abroad and take an income from them, or liquidate them abroad and repatriate the cash - No asset tax.

Physical property on the other hand, that's much more difficult to off-shore. Try moving your Mayfair penthouse to the Caymen Islands. You can move your companies, your shares or even yourself off-shore, but you're going to find it difficult to move a building. Hence my suggestion for a property tax.

There are workable taxes on wealth and speculation, but a general asset tax is not one of them. In fact, I would go so far as to say that it encourages tax havens.

cyanc

@cyanc - about 6 years ago

Also, I should add, an I'm in danger of widening this thread to taxation in general, the proposal to replace capital gains tax also has issues with regressiveness. The good thing about a capital gains tax is that it doesn't affect the poor (they have no capital). However, the problem with Capital Gains Tax is that it does not distinguish between speculation and productive activity. If you start a successful small local business (like a shop or a hotel) provide a good service, employ people in the community etc, you get whacked with capital gains tax if you sell at retirement. Conversely, if you buy a house (perhaps convert a local shop) and it happens to rise in value, or you inherit up to £350k from a rich relative, you are exempt.

Currently the price of an average house in central London is rising at £30 per HOUR!! This is more than the living wage, and it is not taxed. We are rewarding speculation (often using borrowed money) above work. This needs to change and is fundamental to reducing inequality and building an inclusive society. Currently the tax and benefits systems have the effect of funnelling money upwards - 100% of housing benefit goes to Landlords, the state supports employers who pay below a living wage via tax credits.

These are big issues that go beyond individual taxes, but the burden of taxation needs to shift from the poor to the rich, and this needs to be done at source - i.e. prevent the injustice - discourage the speculation, reduce the "value" of property - don't try to chase it once it's already happened.

Back to capital gains tax, You could argue that capital gains tax should be extended to ALL capital gains, first homes, inheritance, everything. You could then abolish inheritance tax instead. It would still not be truly "fair", but it would be a lot fairer than it is now.

Sorry for banging on about this stuff, but I don't see any mention of it in mainstream politics. These aren't new ideas either, there were big debates about this in the first half of the 20th century, and you can trace roots right back to groups like The Levellers. It's something that politics has lost. We are all the poorer (literally) for it.

philipjohn

@philipjohn - about 6 years ago

"you will still need a council/ property tax" Why do you say that? Note, I'm not saying single homeowners should be taken out of the tax bracket, I'm saying there should be a tax-free threshold, using the same principle as income tax.

"Asset taxes cannot be applied to companies for the obvious reason that assets are not directly related to profits or turnover." Why not? That assumes that we only tax corporations on profit or turnover. Why couldn't we tax their assets as well?

"You can move your companies, your shares or even yourself off-shore" That isn't inherently a problem with the Asset Tax though, and can be addressed in other ways. I'm sure we had a conversation somewhere (can you remember @Floppy @PaulJRobinson ?) about forcing properties to be owned by individuals, not corporations, which would address that.

"The good thing about a capital gains tax is that it doesn't affect the poor (they have no capital)" That's not the case, as someone who has inherited a property which they then sell may have to pay Capital Gains Tax, regardless of their own financial position.

Your point about transferring some of the burden to the wealthier in society is spot on of course, but that's exactly what an Asset Tax, with a tax-free threshold, would do. Those on or below the living wage would not pay income tax, and if they own a modest family home they will not pay the Asset Tax. We should further abolish Council Tax for them, and shift all of that burden onto an Asset Tax which is levied on those who own large, or multiple properties.

Let's take Swindon as an example (I heard something about the place being "average" recently). We haven't specified some details of the Asset Tax (which we need to do) so I've assumed here that; - "harmonized with the rate of tax on earned income" means 20% (the basic rate of income tax) - that 20% gets charged on the increase in value of a property, for which I'm taking the average of 9.9% as a demonstration - the taxable amount (rise in value) is pooled with income and forms part of their tax-free allowance, if they're income is below the threshold. To demonstrate this I'm assuming the property owner earns the living wage and so sits just within the tax-free allowance.

| Property Value | Council Tax Band | Council Tax Bill | Income Tax | Total | - | Rise in Value | Asset Tax Due | Income Tax | Total | | :-: | :-: | :-: | :-: | :-: | :-: | :-: | :-: | :-: | :-: | | £40,000 | A | £922.18 | £1,672.00 | £2,594.18 | - | £3,960 | £792.00 | £0 | £792.00 | | £52,000 | B | £1,075.87 | £1,672.00 | £2,747.87 | - | £5,148 | £1,029.60 | £0 | £1,029.60 | | £68,000 | C | £1,229.57 | £1,672.00 | £2,901.57 | - | £6,732 | £1,346.40 | £0 | £1,346.40 | | £88,000 | D | £1,383.27 | £1,672.00 | £3,055.27 | - | £8,712 | £1,742.40 | £0 | £1,346.40 | | £120,000 | E | £1,690.67 | £1,672.00 | £3,362.67 | - | £11,880 | £2,376.00 | £0 | £2,376.00 | | £160,000 | F | £1,998.06 | £1,672.00 | £3,670.06 | - | £15,840 | £3,168.00 | £0 | £3,168.00 | | £200,000 | F | $1,998.06 | £1,672.00 | £3670.06 | - | £19,800 | £3,960 | £0 | £3,960.00 | | £320,000 | G | £2,305.45 | £1,672.00 | £3,977.45 | - | £31,680 | £6,336.00 | £0 | £6,336.00 | | £500,000 | H | £2766.54 | £1,672.00 | £4,438.54 | - | £49,500 | £9,900.00 | £0 | £9,900.00 | | £750,000 | H | £2766.54 | £1,672.00 | £4,438.54 | - | £74,250 | £14,850.00 | £0 | £14,850.00 | | £1,000,000 | H | £2766.54 | £1,672.00 | £4,438.54 | - | £99,000 | £19,800.00 | £0 | £19,800.00 |

The table is split in two halves - the first demonstrates the current situation for an individual earning the living wage, the second half shows the tax burden with our income tax threshold at the living wage level, no council tax and an asset tax linked with income tax.

"Rise in value" is the property value x 9.9%

"Asset Tax Due" is Rise in Value x 20%

Another scenario to consider is the person in a Band A property earning £800 less than the living wage. They would pay NO Asset Tax, or Income Tax. I.e. until their total income, including appreciation of assets rises above the living wage we don't tax them at all. We absolutely should consider whether we need have a separate, higher threshold for Asset Tax because the hypothetical person on the first row is being pushed below the living wage by taxation.

I think this demonstrates that an income-linked Asset Tax (as already proposed, but with added detail) is more progressive than the current system, because it; - takes those on modest incomes in modest houses out of punitive taxation (though see note about about the first row) - dramatically increases the taxes on those owning large or multiple properties, but not generating significant income

cyanc

@cyanc - about 6 years ago

My problem with an asset tax in general is that not all assets are the same. Non-productive assets like property are used for speculation, whereas productive assets, like engineering equipment are used to invest in production. You cannot tax them in a blanket way without being regressive.

"you will still need a council/ property tax" Why do you say that? Note, I'm not saying single homeowners should be taken out of the tax bracket, I'm saying there should be a tax-free threshold, using the same principle as income tax.

Well, if the asset tax had a threshold of £350k, most people would be exempt, as the average property price in the UK is ~£260k, and if it was offset by debt, even fewer would be paying it. So there would be a serious shortfall unless the asset tax was very high for the few people who have assets over that amount. My suggestion of a property tax sets the amount the average person pays at roughly the same as council tax, but with the option to raise it in percentage terms for the most asset-rich.

"Asset taxes cannot be applied to companies for the obvious reason that assets are not directly related to profits or turnover." Why not? That assumes that we only tax corporations on profit or turnover. Why couldn't we tax their assets as well?

Currently we only directly tax businesses on domestic profits - There are big issues with this as demonstrated by Google,Amazon, Vodafone and other multinationals, and there are solutions, but an asset tax on businesses is most definitely not one of them.

What you are saying is that you'd prefer to tax a business that requires the purchase of high value assets more than a business that doesn't. So you would be happy taxing a green energy company with its expensive wind turbines and solar panels more than a chain of estate agents with a few minis? I wouldn't.

"You can move your companies, your shares or even yourself off-shore" That isn't inherently a problem with the Asset Tax though, and can be addressed in other ways. I'm sure we had a conversation somewhere (can you remember @Floppy @PaulJRobinson ?) about forcing properties to be owned by individuals, not corporations, which would address that.

You could force residential property to be owned by individuals, but then you have the problem of the past. What about properties that are already owned by companies? Can you force them to be sold on to individuals? So my B&B is owned by my limited company, I have to sell it to myself? What if the bank decides I'm not credit worthy? Do I have to close my hotel down? Or find a rich benefactor? - The Duke of Westminster's got a few bob, maybe he could buy it and rent it back to me. It's unworkable, or would take hundreds of years to filter through if only applied to new sales. It's these kinds of approaches that have allowed the descendants of feudal landowners to hold onto land in perpetuity.

"harmonized with the rate of tax on earned income" means 20% (the basic rate of income tax) that 20% gets charged on the increase in value of a property, for which I'm taking the average of 9.9% as a demonstration

Wait, now I'm totally confused. You're saying that your proposed asset tax only applies to rises in asset values, not the values themselves?

What happens if assets fall in value? It's hard to believe, I know, but UK property prices fell in 2008-09 There's a graph here: http://www.bbc.co.uk/news/business-10789361

Does this mean that the treasury receives no asset tax at all during these years? I'm assuming you are not proposing a tax rebate to the wealthy when their assets fall in value?

Honestly, unless I'm grossly misunderstanding most of this, there are flaws in the asset tax proposal everywhere. Maybe they're all addressable somehow using other rules, but you'll end up playing a game of whack-a-mole, which is what tax avoidance schemes thrive on.

Taxing property annually at a percentage of its value is simple. It targets speculation in non-productive assets and shares public investment in infrastructure without changes in ownership rules or complex thresholds and exemptions.

Finally, by introducing the concept of there being a "cost" to the ownership or exploitation of a finite resource - which can be built upon in other areas (notably natural resources) - it leads us towards the wider concept of the common-wealth, the idea that in a country like the UK, with its hundreds of years of development - its buildings, its infrastructure - we are all born into an "inheritance" that can benefit the many rather than be captured by the few.

cyanc

@cyanc - about 6 years ago

Let me put some historical context behind this proposal and why I think a property tax, and eventually a land value tax (LVT) is a vitally important part of the process of stopping the capture of wealth by the few at the expense of the many.

Until the 18th century a significant portion of the land was classed as “common”. This meant that anyone could use it to farm - graze their cattle or grow food. People would own their cattle and the produce of their labour (milk, meat, food etc.) but the land itself was held under informal collective control, its intrinsic value (later to be described as its “common-wealth”) was shared.

Then came the Enclosures Act, land became owned by a land-lord and rent became due on it. This essentially meant that the people who had worked on the land now had to pay rent to someone to do what they were previously doing for “free”. The landlord offered no added value, the land had been there before the landlord was born and would be there after he died, all that had happened was that a proportion of the produce from the land was “captured” by its new “owner”. Naturally, the average person was not very happy about this, and protested. An organised group formed and “levelled” the rows of hedges (hedgerows) put up to mark out the owner’s land. The group became known as The Levellers and they organised protests and lobbied government to revoke the act. They were violently repressed, their followers imprisoned and their leaders executed. They are now credited with arguably starting the movement that eventually resulted in universal suffrage, but the process of the capture of the intrinsic “common-wealth” of land and property via the threat of violence was established and exists to this day. The quintessentially English vista of patchwork fields is actually a result of theft and violent repression.

Fast forward to today, people no longer live off the land and property ownership is much more complex, with things like mortgage debt, freeholds and tenancy. But the concept remains. If a buy-to-let landlord outbids you when you are buying a house, they’re then able to rent that house back to you at a profit and capture any rising value of that property, or worse still, leave that house empty and wait for the value to rise and sell at a profit later. They are not adding any value. They are not building the house, the house will not be knocked down if landlords or speculators do not buy them. The common-wealth portion of that property (and ultimately the land) is being “captured”.

A property tax puts a price on this. It recognises that by “owning” an existing and finite resource, the owner is gaining a benefit via its intrinsic value. If they have bought it for their own use because they love it and can afford it, or for a price that still allows them to rent it for a profit, or they have a business model that adds significant rental value to the property above its intrinsic value, fair enough. But those choices and business decisions should all come AFTER a proportion the intrinsic value of the property is shared via a property or land tax.

I hope this all makes sense, and demonstrates why property and land are not the same as other assets, they are finite and have an intrinsic value that is not created by their owner, it belongs to all of us.

philipjohn

@philipjohn - about 6 years ago

It seems like we're not really far apart on this. Most of the issue comes down to the issues with our current Asset Tax proposal. The issues that have become apparent thanks to your proposal are; - We're currently adding to the tax burden by leaving council tax as well as the Asset Tax. - Wording. While it's called an Asset Tax, it was conceived in the context of property, and I don't believe any of us really considered assets other than property. - Debt offset. Intended as an attempt to prevent "over-taxation" of non-speculative property owners, this wasn't thought through properly and we need to consider the impact of this on highly leveraged property portfolios. - Our suggestion to pool income tax is a good one, but isn't explained properly, and is probably rendered useless with the debt-offset.

I've touched on this in my replies above, but here's what I think we should do to correct the above; - Abolish council tax, replacing the revenue with Asset Tax revenue. - Clarify the Asset Tax as a tax on property. Keeping the name means we can add other assets in the future as we see fit. - Clarify that Asset Tax is a personal tax, not a business tax. - Clarify what happens with jointly-owned property (e.g. a couple). - Remove the debt offset. - Remove the tax-free threshold - Change the tax to be based on the increase in value of a property, not the overall value.

That would bring the policy inline with the assumptions I made in order to generate the examples above that, I think, show a progressive tax which lifts poorer home owners out of property-based tax altogether and taxes heavily those generating wealth through property.

I'm sure you'll ask "Why a tax on the rise in value, not the value?" My answer: We are aiming to tax wealth generated by holding property. If a property is not generating wealth, taxing it would not then be serving our aims. It is likely that falling house prices would be coupled with a slowing economy and so a tax that remains the same would unfairly penalise poorer home owners who could well be facing wage freezes and rising costs of living.

cyanc

@cyanc - about 6 years ago

Clarify what happens with jointly-owned property (e.g. a couple).

And clarify what happens when properties are owned by businesses. If the answer is to stop properties being owned by businesses, then clarify what happens to existing properties owned by businesses (compulsory sale or allow them to avoid the asset tax).

I'm sure you'll ask "Why a tax on the rise in value, not the value? My answer: We are aiming to tax wealth generated by holding property. If a property is not generating wealth, taxing it would not then be serving our aims.

The short rebuttal to that is to say that rising notional value is not rising wealth. (You're not actually wealthier until you sell).

The longer rebuttal is to point out that wealth is not just generated via the rise in value of a property.

Income from rents is often inversely proportional to property value for example. Secondly, falling property prices offer great opportunity to property speculators - zero tax at this point would act as a massive subsidy to the "bottom feeders" in a boom bust cycle.

Taxing just rises doesn't work. There's a reason why rises in assets are never taxed on a rolling basis - if you can find country in the world that does this or has ever done this, please post details of it. I'd be interested to see where it has been tried and how long it lasted. Capital gains tax does this kind of thing on sale, but no one does it on a rolling notional valuation.

You are basing your calculations on an average rise of 9.9%, which is WAY above inflation. If property prices are rising that much above inflation then there is something fundamentally wrong with the economy, it's in a boom, so you basing your normalised tax revenue on the economy being dysfunctional. There are so many scenarios where the tax would either be punitive - prices are currently rising by over 25% in London - or completely disappear - prices falling as in 08-09.

So in summary your proposal as it stands would favour speculators who can buy into busts and sell into booms, while punishing ordinary people by fluctuating wildly from year to year.

We desperately need a tax regime that punishes speculation and hoarding, and promotes productive work and investment. It is one of the great injustices of our era that the opposite is so strongly the case.

I see what you are trying to achieve with your proposal, and I completely agree with it in principle, but you are falling into the trap of trying to tax the ill-gotten-gains of the injustice once it happens, rather than removing the incentives that lead to the injustice happening in the first place.

cyanc

@cyanc - about 6 years ago

It occurs to me that what we are actually discussing here is policy, and policy isn't really what goes into a manifesto. Exactly how to implement a manifesto pledge is a matter of debate, precedent, economic feasibility etc., a manifesto pledge is a general stated aim. So maybe this part should just say something like. "We will reduce the burden of income tax on the low-paid by shifting taxation towards unearned income, speculation and asset accumulation". Or something.

It does raise a wider issue of what an open manifesto is, in terms of debating general aims vs coherent solutions to actual problems. Reading through it, there seems to be a mixture of both.

mikera

@mikera - about 6 years ago

@cyanc - surely a good manifesto should do both? state high level principles and a current plan about how to achieve them. You expect the plan to change as situations change, but the principles should hopefully stay the same.

On this specific topic: property tax would be an awesome improvement over the current situation! It definitely improves incentives in many positive ways and would be an important way to reduce inequality.

As a technical point can we avoid specifying an exact percentage value in the manifesto, or at least specify that this initial level would be subject to annual budgetary review?

Also can we specify that other redundant taxes get removed (e.g. stamp duty?). Taxes on transactions are a bad idea, and it would be better to eliminate stamp duty entirely.

Apologies if this is elsewhere in the manifesto already - I'm new to this....

cyanc

@cyanc - about 6 years ago

I'd agree re stamp duty. It should be absorbed into a general property tax, there are also other issues with transactions - like gazumping - that could be eliminated by making offers legally binding. But I would disagree that all taxes on transactions are a bad idea. A financial transaction tax (Tobin tax/ Robin Hood tax) for example, would be a good idea to reduce high-volume speculative trading. But that's another topic.

mikera

@mikera - about 6 years ago

@cyanc - this is now rather OT but the I think the Tobin tax is a really bad idea. It would harm liquidity in markets (which you absolutely need for any functioning financial system) but wouldn't solve the real issues in finance (insider trading, taking one-sided bets with other people's (or public) money, oligopolistic industry structures that screw consumers and small businesses).

There is nothing inherently wrong with high volume trading in itself (just as there is nothing wrong with letting people efficiently sell other kinds of property like homes)

Furthermore, I'm pretty sure that a Tobin tax in the UK would be evaded very quickly (either by moving business offshore, or exploiting CFD-like structures to emulate the same return profile without the tax). You'd just be end up rewarding those who can afford offshore arrangements and better tax lawyers.

TL;DR = Transaction taxes are almost always a bad idea

PaulJRobinson

@PaulJRobinson - about 6 years ago

This has been a complex but extremely interesting thread to follow. Would @cyanc mind summing up (succinctly) your argument with any changes you'd like to make based on everyone else's inputs that you think are warranted (ignoring those you don't - after all this is your proposal). I think it would make it easier for everyone to work out what we're being asked to vote on. Thanks!

philipjohn

@philipjohn - about 6 years ago

"It occurs to me that what we are actually discussing here is policy, and policy isn't really what goes into a manifesto" the exact same thought came to me this morning @cyanc :)

@PaulJRobinson's suggestion is a good one. You identified, @cyanc some serious issues with our Asset Tax which it'd be good to sort out in the context of your proposal and your point about policy vs principles/aims. Awesome!