Friday, June 24, 2005
Pension reforms to 'benefit rich'
Government plans to simplify pension rules will boost the wealth of the richest members of society by £2bn, research group Datamonitor claims.
The rules, due to be introduced in April 2006, will allow people to include buy-to-let investment property in their pension pot.
As a result, many investors will be in line to claim pension tax relief.
Datamonitor said the change would mean that top-bracket 40% income tax payers would get relief totalling £2bn a year.
The planned pension reforms will affect the whole market, but Datamonitor said that the option to claim tax relief on a buy-to-let property would prove particularly attractive to the rich.
Prohibitive costs
Datamonitor estimated that the vast majority of people taking advantage of the pension shake-up will be earning more than £75,000 a year.
The group said this was because the costs of setting up a self-invested personal pension, the necessary pension framework for claiming tax relief on buy-to-let property, were high.
"The government has underestimated the impact that the changes will make," said Oliver Guirdham, author of the Datamonitor report. "This constitutes a £2bn tax relief for Britain's wealthiest customers."
Julian Crooks, an independent financial adviser with the Sheffield-based Financial Planning Service, branded the buy-to-let tax break as a "retrograde step."
"This is a tax break for the rich funded by all taxpayers. The money would be better spent encouraging people on average incomes to save more for their retirement," Mr Crooks said.
(Source: BBC News)
The rules, due to be introduced in April 2006, will allow people to include buy-to-let investment property in their pension pot.
As a result, many investors will be in line to claim pension tax relief.
Datamonitor said the change would mean that top-bracket 40% income tax payers would get relief totalling £2bn a year.
The planned pension reforms will affect the whole market, but Datamonitor said that the option to claim tax relief on a buy-to-let property would prove particularly attractive to the rich.
Prohibitive costs
Datamonitor estimated that the vast majority of people taking advantage of the pension shake-up will be earning more than £75,000 a year.
The group said this was because the costs of setting up a self-invested personal pension, the necessary pension framework for claiming tax relief on buy-to-let property, were high.
"The government has underestimated the impact that the changes will make," said Oliver Guirdham, author of the Datamonitor report. "This constitutes a £2bn tax relief for Britain's wealthiest customers."
Julian Crooks, an independent financial adviser with the Sheffield-based Financial Planning Service, branded the buy-to-let tax break as a "retrograde step."
"This is a tax break for the rich funded by all taxpayers. The money would be better spent encouraging people on average incomes to save more for their retirement," Mr Crooks said.
(Source: BBC News)
Thursday, June 23, 2005
Council tax changes 'will hit wealthy'
By Andrew Sparrow, Political Correspondent
(Filed: 20/06/2005)
Council tax payments would soar for people with expensive homes under Government plans, the Tories said yesterday.
Caroline Spelman, the Conservative local government spokesman, said people with homes worth more than £200,000 would suffer under the proposals which have already received the backing of ministers.
She made her claim on the basis of plans for the reform of local government finance in Northern Ireland. The Government is not due to announce its intentions for England until the end of the year, when it publishes the findings of a review of council tax conducted by Sir Michael Lyons. But Mrs Spelman claimed that the Northern Ireland scheme could easily end up being applied on the mainland.
The Office of the Deputy Prime Minister (ODPM), which is in charge of council tax, played down the Tory allegations, but without actually ruling out following the Northern Ireland proposal. The Ulster plan would hit the wealthy by effectively removing the cap on the maximum amount of council tax payable.
At present, people are charged in a series of bands reflecting the value of their property. People in the highest band, Band H, pay twice as much as people in Band D, but within Band H everyone pays the same.
Shortly before the election, in a move that received virtually no publicity in England, the Government proposed changing the system in Northern Ireland so that owners pay in exact proportion to the value of their property. A tax rate of 0.78 per cent applied to the capital value of a home would result in a £390 a year bill for someone living in a house worth £50,000, £1,170 a year for a house worth £150,000 and £3,900 a year for a house worth £500,000.
Last year Ian Pearson, a Northern Ireland minister, said: "It is likely there will be some significant shifts in rate bills, particularly at the top end of the market. It is only fair that those who can afford to pay do pay a fairer share as soon as possible."
Mrs Spelman said: "It is becoming clearer by the day that Labour will use the Lyons review to increase the tax burden on the middle classes and turn a local services tax into a crude wealth tax.
"Their decision not to publish their full plans for England until after the general election was a clear indication that their changes will be painful for many people."
A spokesman for the ODPM said that what was happening in Northern Ireland would not affect what happened in England. "We have not made any decisions. We have to wait until the Lyons report comes out."
(Source: The Telegraph
(Filed: 20/06/2005)
Council tax payments would soar for people with expensive homes under Government plans, the Tories said yesterday.
Caroline Spelman, the Conservative local government spokesman, said people with homes worth more than £200,000 would suffer under the proposals which have already received the backing of ministers.
She made her claim on the basis of plans for the reform of local government finance in Northern Ireland. The Government is not due to announce its intentions for England until the end of the year, when it publishes the findings of a review of council tax conducted by Sir Michael Lyons. But Mrs Spelman claimed that the Northern Ireland scheme could easily end up being applied on the mainland.
The Office of the Deputy Prime Minister (ODPM), which is in charge of council tax, played down the Tory allegations, but without actually ruling out following the Northern Ireland proposal. The Ulster plan would hit the wealthy by effectively removing the cap on the maximum amount of council tax payable.
At present, people are charged in a series of bands reflecting the value of their property. People in the highest band, Band H, pay twice as much as people in Band D, but within Band H everyone pays the same.
Shortly before the election, in a move that received virtually no publicity in England, the Government proposed changing the system in Northern Ireland so that owners pay in exact proportion to the value of their property. A tax rate of 0.78 per cent applied to the capital value of a home would result in a £390 a year bill for someone living in a house worth £50,000, £1,170 a year for a house worth £150,000 and £3,900 a year for a house worth £500,000.
Last year Ian Pearson, a Northern Ireland minister, said: "It is likely there will be some significant shifts in rate bills, particularly at the top end of the market. It is only fair that those who can afford to pay do pay a fairer share as soon as possible."
Mrs Spelman said: "It is becoming clearer by the day that Labour will use the Lyons review to increase the tax burden on the middle classes and turn a local services tax into a crude wealth tax.
"Their decision not to publish their full plans for England until after the general election was a clear indication that their changes will be painful for many people."
A spokesman for the ODPM said that what was happening in Northern Ireland would not affect what happened in England. "We have not made any decisions. We have to wait until the Lyons report comes out."
(Source: The Telegraph
Home improvements tax absurd - Teather (Lib Dems)
Responding to the news that home improvements will lead to higher Council Tax bills, Liberal Democrat Local Government Spokesperson, Sarah Teather MP said: "It's absurd for the Government to be penalising people for investing in their homes.
"Council Tax revaluation will just prove how unfair it is to base local taxes on the value of someone's home.
"Labour just keeps putting up Council Tax because they are too scared to do anything meaningful to reform it.
"We need a fair local income tax, based on ability to pay, not a tax on home improvements."
(Source: Brent Lib Dems)
Comment: This is true, but a local income tax, which taxes people every time they do a bit of overtime or earn a pay rise, is just as absurd?
"Council Tax revaluation will just prove how unfair it is to base local taxes on the value of someone's home.
"Labour just keeps putting up Council Tax because they are too scared to do anything meaningful to reform it.
"We need a fair local income tax, based on ability to pay, not a tax on home improvements."
(Source: Brent Lib Dems)
Comment: This is true, but a local income tax, which taxes people every time they do a bit of overtime or earn a pay rise, is just as absurd?
Home ownership schemes 'subsidising landlords'
Matt Weaver in Harrogate
Thursday June 23, 2005
Lenders today accused housing associations of using low cost home ownership schemes to raise cash rather than benefit consumers.
Peter Williams, deputy director general of the Council of Mortgage Lenders, said those running housing associations have "finally realised" how much money from current part buy/part rental shared ownership schemes was subsidising other activities.
The government is proposing to scrap such schemes and replace them with equity loans known as Homebuy, which will be less lucrative for housing associations.
Tomorrow the trade body for housing associations is expected to warn that the government's plans are not financially viable.
But speaking at the Chartered Institute of Housing conference in Harrogate today, Mr Williams accused associations of being "producer driven" in their approach to home ownership.
"Many housing associations are more interested in the receipts and the cash flow to subsidises their rental programmes. Some of this is more about the benefit to the wider system than about the benefit to the consumer," he said.
Mr Williams claimed that housing associations' "fire and fury" over the plans was an overreaction.
"When you look at homebuy the numbers are miniscule," he said. "Chief executives [of housing associations] have asked me whether I'm intent on destroying the housing association sector [by backing the government's plans]. But the numbers we are talking about are 4,000 loans a year. If that is destruction heaven help us."
Mr Williams also said the government's policy on home ownership was contradictory. He said that on the one hand people were heavily taxed for owning assets but on the other the government was promoting home ownership as part of its enthusiasm for asset-based welfare.
"The government has been unclear about what it wants to do," Mr Williams said. He pointed out that when Labour first came to power it cut the funding to low cost home ownership schemes, but more recently it had been forced to reverse those cuts.
Sarah Webb, director of policy at the CIH, announced new proposals to give tenants who could not afford any form of home ownership the chance to own assets. The idea, known as Homesave, includes a plan to pool tenants' savings to invest in affordable housing.
Ms Webb said the government had agreed to pilot the idea.
(Source: Guardian Society)
Thursday June 23, 2005
Lenders today accused housing associations of using low cost home ownership schemes to raise cash rather than benefit consumers.
Peter Williams, deputy director general of the Council of Mortgage Lenders, said those running housing associations have "finally realised" how much money from current part buy/part rental shared ownership schemes was subsidising other activities.
The government is proposing to scrap such schemes and replace them with equity loans known as Homebuy, which will be less lucrative for housing associations.
Tomorrow the trade body for housing associations is expected to warn that the government's plans are not financially viable.
But speaking at the Chartered Institute of Housing conference in Harrogate today, Mr Williams accused associations of being "producer driven" in their approach to home ownership.
"Many housing associations are more interested in the receipts and the cash flow to subsidises their rental programmes. Some of this is more about the benefit to the wider system than about the benefit to the consumer," he said.
Mr Williams claimed that housing associations' "fire and fury" over the plans was an overreaction.
"When you look at homebuy the numbers are miniscule," he said. "Chief executives [of housing associations] have asked me whether I'm intent on destroying the housing association sector [by backing the government's plans]. But the numbers we are talking about are 4,000 loans a year. If that is destruction heaven help us."
Mr Williams also said the government's policy on home ownership was contradictory. He said that on the one hand people were heavily taxed for owning assets but on the other the government was promoting home ownership as part of its enthusiasm for asset-based welfare.
"The government has been unclear about what it wants to do," Mr Williams said. He pointed out that when Labour first came to power it cut the funding to low cost home ownership schemes, but more recently it had been forced to reverse those cuts.
Sarah Webb, director of policy at the CIH, announced new proposals to give tenants who could not afford any form of home ownership the chance to own assets. The idea, known as Homesave, includes a plan to pool tenants' savings to invest in affordable housing.
Ms Webb said the government had agreed to pilot the idea.
(Source: Guardian Society)
Friday, September 03, 2004
Lloyd George's "infamous" budget
In the Asquith government (1908-15) Lloyd George was chancellor of the Exchequer and the man behind the infamous 'people's budget' of 1909.
The budget promoted higher land taxes and a super tax on incomes over 3000ukp to pay for social reform programs and rearming the navy.
Rejected by the Lords, the budget drove a wedge between the two houses that resulted in the Parliament Act of 1911.
Lloyd George's garden revamped, BBC NEWS
("Infamous?" One of the most important steps towards a modern welfare state? Shurely shome mishtake!)
The budget promoted higher land taxes and a super tax on incomes over 3000ukp to pay for social reform programs and rearming the navy.
Rejected by the Lords, the budget drove a wedge between the two houses that resulted in the Parliament Act of 1911.
Lloyd George's garden revamped, BBC NEWS
("Infamous?" One of the most important steps towards a modern welfare state? Shurely shome mishtake!)
Tuesday, May 11, 2004
Scotsman.com Business - Radical reform could change Lie of the Land
Scotsman.com Business - Food, Drink & Agriculture - Radical reform could change Lie of the Land:
But first and foremost introduce land value taxation. Revenue from this would, he says, be substituted for income tax, VAT, corporation tax and NIC.
Land-rent charges should be levied on all land, urban and rural. Land prices would fall, giving tenants and new entrants more chance, while scrapping subsidies would mean that returns would be related only to a farm's productive capacity which would be a good thing for farmers, employees and the rural economy as a whole.
Thanks to Mark Monson
But first and foremost introduce land value taxation. Revenue from this would, he says, be substituted for income tax, VAT, corporation tax and NIC.
Land-rent charges should be levied on all land, urban and rural. Land prices would fall, giving tenants and new entrants more chance, while scrapping subsidies would mean that returns would be related only to a farm's productive capacity which would be a good thing for farmers, employees and the rural economy as a whole.
Thanks to Mark Monson
Saturday, April 17, 2004
Metroactive Features | Housing Crisis:
"[Henry]George postulated that what gave the land its value was the community itself. Was it not the very proximity to existing businesses and consumers that accounted for the astronomical prices being paid for land? Therefore, that value should be returned to the community, via a direct tax on land. The value of the land would relate directly to its productive capacity. The higher the productivity, the higher the tax. Landowners who chose to hold productive property off the market in hopes of capitalizing on future price increases would be forced to sell or face paying the tax, thereby making speculation impossible. "
"[Henry]George postulated that what gave the land its value was the community itself. Was it not the very proximity to existing businesses and consumers that accounted for the astronomical prices being paid for land? Therefore, that value should be returned to the community, via a direct tax on land. The value of the land would relate directly to its productive capacity. The higher the productivity, the higher the tax. Landowners who chose to hold productive property off the market in hopes of capitalizing on future price increases would be forced to sell or face paying the tax, thereby making speculation impossible. "
Wednesday, March 31, 2004
New 'site value tax' proposal would hit homeowners
From the Irish Times:
A new tax on the value of land, as part of a range of measures to tackle the problems of the housing market, is proposed in a report being written by the National Economic and Social Council (NESC).
...
The tax would be based on the site value, rather than the value of land and buildings, and would apply to all types of property, including residential, commercial and development land.
The report argues that such a tax would encourage the early release of land by property-owners for housing and promote high-density development. It could also lower the price of land, it says, thus making it cheaper for the State to provide social and affordable housing. The revenue could contribute to local infrastructure development.
From the Irish Times:
A new tax on the value of land, as part of a range of measures to tackle the problems of the housing market, is proposed in a report being written by the National Economic and Social Council (NESC).
...
The tax would be based on the site value, rather than the value of land and buildings, and would apply to all types of property, including residential, commercial and development land.
The report argues that such a tax would encourage the early release of land by property-owners for housing and promote high-density development. It could also lower the price of land, it says, thus making it cheaper for the State to provide social and affordable housing. The revenue could contribute to local infrastructure development.
Monday, March 29, 2004
Sea of red tape ahead as council tax faces the axe
In the UK, the 'Balance of Funding review' from the Treasury and the Office of the Deputy Prime Minister is looking at a range of options: reformed council tax, localised non-domestic rates, local income tax, localised vehicle excise duty, localised stamp duty on property transfers, local sales tax, local land value tax, tourist [hotel bed] taxes, a particular form of local sales tax, charging for/trading of local authority services, local charges for street works by utilities, local congestion charging, and environmental taxes.
In fact, land taxes are the most popular form of local tax, according to John Loughlin and Steve Martin in their book International Lessons - Balance of Funding Issues , published last year. Of 25 countries surveyed by the Council of Europe in 2000, 23 had some form of property tax, whether on land or buildings or both.
'Land value tax', an idea being pushed by the Labour Land Campaign, could emerge as a more serious runner than LIT. It charges people on the notional rental value of their property, and would apply to unoccupied and unused land. (Council Tax can reward non-use of property by being waived on empty buildings.)
The rental value under Land Value Tax would reflect such issues as the fertile soil of a farm, the central location of homes in inner London and the transport, education and other infrastructure benefits near each property.
From The Observer, 1 February 2004
In the UK, the 'Balance of Funding review' from the Treasury and the Office of the Deputy Prime Minister is looking at a range of options: reformed council tax, localised non-domestic rates, local income tax, localised vehicle excise duty, localised stamp duty on property transfers, local sales tax, local land value tax, tourist [hotel bed] taxes, a particular form of local sales tax, charging for/trading of local authority services, local charges for street works by utilities, local congestion charging, and environmental taxes.
In fact, land taxes are the most popular form of local tax, according to John Loughlin and Steve Martin in their book International Lessons - Balance of Funding Issues , published last year. Of 25 countries surveyed by the Council of Europe in 2000, 23 had some form of property tax, whether on land or buildings or both.
'Land value tax', an idea being pushed by the Labour Land Campaign, could emerge as a more serious runner than LIT. It charges people on the notional rental value of their property, and would apply to unoccupied and unused land. (Council Tax can reward non-use of property by being waived on empty buildings.)
The rental value under Land Value Tax would reflect such issues as the fertile soil of a farm, the central location of homes in inner London and the transport, education and other infrastructure benefits near each property.
From The Observer, 1 February 2004
Tax avoidence
Richard Adams suggests that Tony Blair's case against higher taxes - that they do not produce higher yields - follows a logic that, taken to its extreme, is an argument for no tax at all (You must be having a Laffer, January 22). Not quite. What follows from Blair's logic is that we should get rid of taxes that can be evaded or avoided - such as taxes on income, for example - and replace them by a tax on the rental value of land, since land cannot be hidden, shifted around the country or removed to a tax haven. Further, a tax on the rental value of land cannot be ducked by any trick of law or accountancy.
Henry Law
Land Value Taxation Campaign
From Guardian Letters, 24 January 2004
Richard Adams suggests that Tony Blair's case against higher taxes - that they do not produce higher yields - follows a logic that, taken to its extreme, is an argument for no tax at all (You must be having a Laffer, January 22). Not quite. What follows from Blair's logic is that we should get rid of taxes that can be evaded or avoided - such as taxes on income, for example - and replace them by a tax on the rental value of land, since land cannot be hidden, shifted around the country or removed to a tax haven. Further, a tax on the rental value of land cannot be ducked by any trick of law or accountancy.
Henry Law
Land Value Taxation Campaign
From Guardian Letters, 24 January 2004
