There are two ways you can indulge in a bit of fantasy at Blackpool this week. One is to see Hot Ice, the iceskating spectacular. The other is to listen to Gideon Osborne for an hour. If you are under 50, the former would probably be more worth your while.
To be fair, his idea of a flat rate charge on all non-doms (I thought someone who is not dom was called a submissive, but clearly I frequent with the wrong sort of people) is worth considering. It is very easy to threaten to crack down on people who live here yet evade taxation, yet Gordon Brown has demonstrated that the reality rarely matches the rhetoric. We should not dismiss a proposal out of hand that would at least do something. I have an open mind, and I’d be interested in hearing what others thing of this.
This tax rise is to be balanced out with two tax cuts: one on stamp duty for first time homebuyers, the other on inheritance tax. Sadly, both of these cuts are wholly irresponsible.
Firstly, the cut in stamp duty for first time homebuyers for property values up to Â£250,000. Sounds fair enough, although it means chuff all to anyone buying a first home worth more than Â£250,000. Is a one-off payment of Â£2,500 really that significant to a first time homeowner? We might see a few houses just below the Â£250,000 threshold drop their prices in the very short term, but it is also likely to increase inflationary pressure on properties worth significantly less than that. Overall, it will do nothing whatsoever to make houses more affordable or to discourage speculative property investment.
The proposed inheritance tax cut is even worse. It will lock up even more property that would otherwise be available to first time home owners. It will benefit those families who have benefited from the massive increase in property values over the past decade while punishing everyone else. Far from rewarding hard work, as Osborne suggests, it will severely curtail the purchasing power of anyone struggling to get onto the housing ladder.
I’m not denying that Stamp Duty Land Tax and IHT are bad taxes, although I suspect my definition of bad differs from Osborne’s. I would replace them, along with all other existing wealth taxes with a single land value tax. Simple, fairer and a dampener on property speculation.
Let’s be clear about this: these tax proposals will result in higher, less affordable house prices for first time buyers, while offering the already wealthy a significant tax cut. They are about entrenching privilege not expanding opportunity. Faced with a choice of cutting income taxes on low wage earners and rich homeowners, they’ve opted for the latter. True to form, but the fact they are pretending otherwise really sticks in my craw.