14:07 PM, 18th December 2015, About 7 years ago 9
Philip Booth is a Professor of Finance, Public Policy and Ethics at St. Mary’s University, Twickenham. He recently issued the following statement to a member of the Property118 Campaign Group, along with his blessing for its publication ….
“Osborne is either being deliberately dishonest or simply does not understand the issue when he uses the tax relief for owner occupiers example. Tax on owner occupied imputed rent was abolished in 1963 (in my view it should be brought back, but that is a separate point) and tax relief on mortgage interest was intended as an offset against that (because interest is taxed in the hands of the financier of the mortgage, if appropriate). When the tax on imputed rent was abolished the tax relief that remained was an anomaly (or, arguably, designed to shove society in the direction of owning rather than renting). There was nothing any longer to relieve (so, of course, it just relieved general income tax paid on income).
The case of renting is totally different. Here, tax is paid on the rent and the interest is a business cost (as with any other business). One should pay tax on the profit and the financier of the mortgage pays tax on the interest.
Any other position is essentially arguing that providing shelter for people who cannot afford to buy is less economically worthy than any other economic activity that would be taxed as a business and it should therefore be discriminated against.
To put it quite bluntly, this is an elementary undergraduate public finance error that should not be made in the Treasury.”
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