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Archive for the tag “tax”

UK Housing Prices & Inheritance

The Governor of The Bank of England has again warned of the risk to our faltering small recovery and of the need to build more houses or the increasing likely hood of raising interest rates to dampen down house price inflation. Also in the news is the widening gap between the rich and the relatively poor.

Political attention is likely to focus on the house price boom because for politicians this is the easy option but this is allied to increasing inequality of not just wealth but also inequality of opportunity. The main cause of inequality is inheritance and if this were tackled the housing inflation problem would largely solve itself. Many of the last generation bought homes at more or less sensible prices and have seen their value increase many times over the general inflation rates, an increase that is not earned. When they perhaps down size or die they can pass on to their children large sums which their offspring can use to buy their own homes; homes that without this unearned windfall they could not otherwise contemplate. This of course helps to both maintain and fan the fires of house inflation.

In addition to passing on their inflated homes, the wealthy also can afford to give their children the best start in life with all the advantages that money can bring and bequeath their accumulated funds that enable the offspring to acquire even more and so the cycle continues. Apart from a few exceptional individuals the poor will remain poor and indeed, become even more deprived as wealth becomes more concentrated in the hands of a small minority. The result of this imbalance is that the nation as a whole will lose out on ideas, businesses and social benefits due to the suppression of the less well off who cannot make or even recognise the best use of their talents or from lack of capital to advance their ideas.

What we need, but is at present anyway, unlikely to be done, is a strong inheritance tax which some may say is even punitive. If someone builds up huge wealth there is no reason that he/she should not enjoy a rich lifestyle for as long as they live but equally there is no reason why their children should continue to enjoy that lifestyle simply by being born into that family. Money raised from this taxation could then be used to improve the conditions of the many and provide start up funding for brilliant new ideas and enterprises.

There would be many arguments against a firm inheritance tax and it’s implementation would be difficult but not impossible. How it could be done is what we pay politicians for.

 

 

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The Cameron Cancer

Would you pay £47.51 for a chicken? Of course not! If the cost of chickens had increased at the same rate the same rate as house rentals over the last 30 years that is what you’d be paying.

A majority of people believe that benefits should be cut, they have swallowed the Tory lies. Housing benefit rose by £1 billion last year and you are lead to believe that it went to the lazy workshy or to single mothers or to drug addicts. In fact 98% went to people who are actually in work! The continuing shortage of housing and landlords greedily ripping off the State are the reasons behind this incredible increase; to cut benefits is to tackle the problem from completely the wrong end.

Cameron’s answer is to compel thousands of our fellow citizens to move hundreds of miles from their homes, their friends and families, and to drag children away from their schools. Under 25’s to be forced to go home to their parents after further education or training rather than starting employment (if they can find any) on low wages because they simply can’t afford a roof over their head. This is the economics of the madhouse.

The arrogance of this extremely wealthy Prime Minister beggars belief, in that he thinks that by kicking away the crutch of a cripple it will make him walk. He cannot countenance the real solution as this would possibly affect his and his rich friends grasp on the national wealth. Embark on a massive house building program which not only employs building workers but also manufacturing by way of the building materials but also every new home will need carpets, curtains, furniture, the list is almost endless, creating even more jobs. Rents to be controlled by law and the National Minimum Wage increased substantially to catch up with what it should be worth. This would also put more of the burden onto employers rather than the tax payers.

It was announced today that government borrowing for the month of May increased by £2 billion more than expected due mainly to lower tax receipts. What the hell do they expect? 2.6 million out of work and 1.4 million in part time work wishing they were in full time employment and therefore not paying any or very little income tax. This regime is a cancer spreading over our land and the only therapy that will work is to cut it out and soon.

UK’s Housing & Land

The Housing shortage & Land.

The problem is that houses are seen as investments to make a profit in the future rather than homes to live in. The cost of the land on which they are built is a major factor particularly in the exceptionally high demand and therefore high priced areas of the country in, for example, the South East of England. The selling off of Council Housing in the Thatcher era contributed greatly to the present crisis. Radical measures are needed.

Suppose that ALL land became the property of the State i.e. held in trust for all of the people, then land for building on could be released at NO charge and the occupier of the building would pay an annual lease for the land based only on the amount of land and not the building on it. This would be fair to all. Following the death of the principle occupants the building then becomes the property of the State with the local authority acting as agent and becomes available for renting. This would achieve three main objectives; houses would revert to being homes rather than investments, the cost of building a new home would plummet and eventually all homes would be rented rather than bought leading to greater availability, affordability and fairness. Additionally, considerable income would be generated through the lease payments for the needs of the population. Moving to a new area or to a larger or indeed to a smaller house would, if anything, become easier. This change could be achieved in little more than a generation. As all land and property would be held in trust for the people by the State but administered locally the system would be democratically accountable.

The same principle would be applied to current landowners and businesses. On the death of the current occupiers of land or the collapse of a business, buildings would become the property of the State and a rent paid by the new tenants. Farmers for example could still pass the business on to their children thus ensuring continuity but the land would be held in common.

Of course none of this is likely to happen due to electoral resistance by the current home owners who will cling to the notion that property values will rise above inflation for ever. This cannot be as like capitalism, of which housing and land ownership is a part, depend on ever increasing production and consumerism. It is better for our future generations to seek a new way now.

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