Jump to content
House Price Crash Forum
Sign in to follow this  
fru-gal

Could The Government Actually Afford Falling House Prices If It Meant A Much Lower Tax Take?

Recommended Posts

Even a government that was anti-HPI in theory would have to make up the tax receipts lost from housing if there was a HPC. High house prices generate high SDLT, IHT,ATED and CGT, so presumably a crash would necessitate finding the money from elsewhere. Housing has become such a large part of the economy that I don't see where they would get the tax receipts from if there was a genuine HPC unless tax on property increased to apply to all homes so that even those in properties worth less than £250k were paying some sort of annual tax (like in the USA)? What do you guys think?

Share this post


Link to post
Share on other sites

Financially, yes, no problem. Stamp duty, CGT etc only come in when a property is sold. With sales at 20% pre-crisis levels, a big crash could well increase tax revenues in the short term.

Then there's the savings on housing benefit in the longer term, and the tax revenues on all the new economic activity in the following recovery.

Politically though they'd have a problem, unless they can figure out a way to let it happen without too many sudden "victims".

Share this post


Link to post
Share on other sites

Isn't transaction volume a fraction of what it was in the run up to 2007? I would have thought the increase in transactions caused by falling house prices would increase the tax take if anything. I don't have actually figures to back that up, it's just my feeling.

Share this post


Link to post
Share on other sites

Isn't transaction volume a fraction of what it was in the run up to 2007? I would have thought the increase in transactions caused by falling house prices would increase the tax take if anything. I don't have actually figures to back that up, it's just my feeling.

IIRC it was 44K for Feb this year it was 100k plus pre 2008 crash and down into the mid 30K in 2009/10

Share this post


Link to post
Share on other sites

IIRC it was 44K for Feb this year it was 100k plus pre 2008 crash and down into the mid 30K in 2009/10

Thanks - so yes, then if more people could actually afford to buy a house, it stands to reason that the tax take should improve as a result. And at the same time banks would be writing more mortgages, so assuming they were able to withstand the shock of HPC it'd be doubles all round.

Share this post


Link to post
Share on other sites

Even a government that was anti-HPI in theory would have to make up the tax receipts lost from housing if there was a HPC. High house prices generate high SDLT, IHT,ATED and CGT, so presumably a crash would necessitate finding the money from elsewhere. Housing has become such a large part of the economy that I don't see where they would get the tax receipts from if there was a genuine HPC unless tax on property increased to apply to all homes so that even those in properties worth less than £250k were paying some sort of annual tax (like in the USA)? What do you guys think?

When property prices and transactions collapsed in Ireland the government brought in a property tax.

The bigger issue is keeping the debt expanding so that the financial system does not collapse when the interest becomes payable.

The debt MUST expand, it's as simple as that. The bullingdon boys were taught that at school, then put into positions so that they can force the debt system upon others whilst profiting from it themselves.

Share this post


Link to post
Share on other sites

More spending, more tax. The public sector has robbed up blind.

cuts, what cuts.

Public departments have been cut, but the money has been diverted into tax cuts, HTB, funding for lending and so on. Public spending has increased year on year. Austerity is a hoax :P

Share this post


Link to post
Share on other sites

None of those taxes raise particularly high amounts in comparison to other taxes.

Not that im sure what it matters. Its certain petrol duty will run day run out (when petrol does!)

They'll just shift petrol tax somewhere else, can do the same for housing.

Share this post


Link to post
Share on other sites

The country can afford falling house prices, but NONE of the major political parties want them to fall. Ed Balls would keep the HtB ISA plus all the other 'help' schemes, UKIP have a BTL LL to represent housing and the libdems will not exist after the election.

The only problem for the next government is the invention of new props to keep the bubble inflating.

Shit happens, governments do not always get what they want.

Edit: With regard to the UKIP housing spokesman, he may be an honest man and put the needs of the country before his own, or he may liquidate his holdings and crash the market so that he can buy back later at a profit...... Who knows?

Edited by Bruce Banner

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   92 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.