Jacob Rees-Mogg: Cutting and decentralising tax

by Property 118

15:34 PM, 30th July 2019
About 3 months ago

Jacob Rees-Mogg: Cutting and decentralising tax

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Jacob Rees-Mogg: Cutting and decentralising tax

Jacob Rees-Mogg has co-authored a paper for the Institute of Economic Affairs titled ‘Raising the Roof – How to solve the United Kingdom’s housing crisis.’

The Paper draws on some of the entries for the second Richard Koch Breakthrough Prize to find free-market solutions to the United Kingdom’s housing crisis. The £50,000 prize is awarded to the boldest free market ideas to increase the supply of houses and the proportion of Home owners. Click here to download the full paper.

Of particular interest under solutions for the housing crisis is the authors’ conclusions on cutting and decentralising tax:

“Fiscal decentralisation is an important part of the solution. The centralisation of our property taxes deprives local government of incentives to allow building or to ensure the quality of the environment, while the structure of fiscal incentives at the national level badly distorts our housing market.

“The solutions begin at the national level itself, where seeking more home ownership does not justify attempting artificially to inflate it by creating tax burdens elsewhere, such as Capital Gains Tax (CGT) on shares that leave homes exempt. This simply increases house prices, and this distortion can be reduced by lowering CGT on shares (Wadsworth 2009).

“High Stamp Duty also harms people’s ability to move and to buy. As James Mirrlees described it, this tax ‘[defies] the most basic of economic principles by taxing transactions and produced inputs respectively’ (Beck and Booth 2019).Stamp Duty can therefore be reduced to 2010 levels, then devolved so that local governments have the capacity to reduce it further (though not to increase it back above 2010 levels). As we have seen, VAT on maintenance and restorationalso harms supply, and canbe abolished (see Meakin 2016).

“Stamp Duty is also too complex, with lower rates for self-built homes, and properties left empty or allowed to become derelict,8 creating an incentive for people to leave properties vacant. The latter harms supply and the capacity to move, while making it difficult for buyers to pay the right tax (although the first-time buyer exemption, which does help people to buy, should remain).

“Meanwhile, as Beck and Booth (ibid.) have proposed, investment in property should be treated like investment in any other business, with all business costs deducted before taxable income is determined, and with no discrimination between different vehicles for holding property.

Could this be seen as a blueprint for housing from a free market point of view? This paper is very different from the awful anti-landlord propaganda being churned out almost everywhere else.

Jacob Rees-Mogg MP was appointed Lord President of the Council, and Leader of the House of Commons on 24 July 2019. Whilst this is not a Ministerial job with a direct responsibility for housing he is considered an influential member of Government.

 

 



Comments

JJ

11:22 AM, 31st July 2019
About 3 months ago

It is true to say that the different VAT treatment of renovation versus newbuild encourages developers to demolish properties. The tax system does not favour multiple occupation; if you do more than rent out one room in your house under the rent-a-room scheme you are likely to attract CGT. At a time when the government is talking about reducing emissions the present tax regime and regulatory burden imposed on landlords does not presently favour investing in your property to reduce its CO2 emissions, reduce the amount of water it consumes or make it more energy efficient.

Whilst I welcome the announcement yesterday that government needs to plant more trees to reduce climate change over the last couple of years I have struggled to reconcile the free-for-all happening at the moment in the planning process with the need to plant trees and conserve water, particularly in the south east.

Whiteskifreak Surrey

12:05 PM, 31st July 2019
About 3 months ago

Reply to the comment left by Mark Alexander at 30/07/2019 - 18:15
As I mentioned before I am not at all a fan of JRM, but that article indeed could provide a glimmer of hope - in only it was followed by an action. And JRM is not known for taking any concrete actions, is he? I very much agree with Mark (as I am a rather cynical person) - it might be in order to get LLs votes in the possible election. Revoking S24 and not introducing removal of S21 are two most important issues. If they stopped S24 now and stopped talking about S21 - at least the new Government would show their intention towards PRS.
Will that happen - I am not holding my breath, and most likely will be increasing rents to cover another attack undoubtedly coming from Westminster side.

reader

14:37 PM, 31st July 2019
About 3 months ago

Hello Mark,

Before you count your chickens are there any other readers who live in the constituency of Bromsgrove? May be they would like to attend their local surgery and discuss JRMS ideas?
Sajid Javid Mp Bromsgrove · Phone
18 High Street, Bromsgrove B61 8HQ
01527 872135

Mark Alexander

15:18 PM, 31st July 2019
About 3 months ago

Reply to the comment left by at 31/07/2019 - 14:37
I like your thinking 🙂

Simon Hall

18:15 PM, 31st July 2019
About 3 months ago

I forwarded JRM's report to one of my friend who is Private Banker and understands buy to let legislation/tax inside out and the following response I received:

"The Tory’s are promising everything to everybody at the moment. They are gearing up for a general election. There is no way on earth they’ll have the money to meet all these pledges. They are promising all this just to win votes from as many sections of society as possible.

It’s all bull-shi* to suck people in."

Then my accountant responded with following:

"I saw an Elephant flying this morning"

Mark Alexander

18:20 PM, 31st July 2019
About 3 months ago

Reply to the comment left by Simon Hall at 31/07/2019 - 18:15
Why is such practice even tolerated, let alone legal. Corbyn is even worse!

If only we had a constitution with a second amendment which allowed us to bear arms against a tyrannical Government!

Simon Hall

18:27 PM, 31st July 2019
About 3 months ago

Reply to the comment left by Mark Alexander at 31/07/2019 - 18:20
" tyrannical Government!" is correct terminology.

Monty Bodkin

22:34 PM, 31st July 2019
About 3 months ago

Reply to the comment left by Simon Hall at 31/07/2019 - 18:15
"The Tory’s are promising everything to everybody at the moment. “

No they aren’t.

As far as Landlords go, it’s just a very slight shift back to traditional Tory values.

Ask your ‘expert’ a few very basic questions about BTL taxation and legislation.

AJR

12:25 PM, 1st August 2019
About 3 months ago

Reply to the comment left by Simon Williams at 31/07/2019 - 10:52
Well said Simon,

It seems that the benefits of competition and a free market have become long forgoten by our less than esteemed tory leaders.
Which is one of many reasons why i as a tory voter of 35yrs will no longer vote for them.

James Masters

8:35 AM, 3rd August 2019
About 3 months ago

Never forget his father literally wrote the manual for disaster capitalism 'Blood In The Streets. Investment Profits in a World Gone Mad' as well as 'The Sovereign Individual' - he wants choas as we transistion to an information society not stability. The key takaway is 'The future is disorder' - that is what he is driving for.

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