Tuesday, Dec 01, 2009

MPC member suggest new taxation wheeze

Telegraph: Posen calls for 'bubble tax' on homes

Adam Posen, the newest member of the Bank's Monetary Policy Committee, said on Tuesday that the Government should consider taxing homeowners if the value of their home rises too fast and also indicated that this may mean imposing capital gains taxes on first homes and raising stamp duty.

Posted by enuii @ 11:36 PM (816 views)
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1. paul said...

"You can't use interest rates to deal with asset prices, therefore different instruments are needed to make sure the bubble doesn't inflate."

That's strange - interest rates seem to have worked pretty well at cooling the last housing bubble in the 90s.

"One of the problems it has relates to how politically feasible it is. It is difficult because with any tax-based system there is a political reality to be considered."

Aah. So raising interest rates is politically unfavourable (but eceonomically sensible). I wonder, is it politically unfavourable because so many MPs have second homes?

Perhaps ... ?

Wednesday, December 2, 2009 07:05AM Report Comment

2. a saver said...

This seems grossly unfair on an only home. So what if your home goes up in value after you've bought it-unless you're getting out of the market. I'm against any form of wealth tax, it's double dipping.
Far better to step in to prevent further HPI when it gets started.

Wednesday, December 2, 2009 08:38AM Report Comment

3. Peter said...

Just another way of relieving us if all our money.

Why they just confisacte everything and introduce a communist system?

At least that would fail quite fast and then we (or the survivors) could restore sanity again.

Wednesday, December 2, 2009 09:11AM Report Comment

4. Exiges said...

Would you get a rebate when your house price goes down ? Thought not..

Wednesday, December 2, 2009 09:50AM Report Comment

5. reader said...

I have no problem with CGT on first homes - after all, nobody would claim that the gains on one's home are hard earned. But I think that the underlying reason of a housing bubble is investment buyers, i.e., buy-to-letters or people buying houses and letting them sit empty to cash in later. Without investors a housing bubble would be prevented because once first-time buyers are priced out nobody could move up the 'ladder' any more. However, investors have now stepped into the place of first-time buyers. Thus, to prevent a bubble, investment should be made less attractive. How? 1. Increase tenant rights so they cannot be chucked out as soon as the investor wants to cash in. This has the nice side effect of making society more fair as well (see e.g., France and Germany) and re-defining housing as a social asset. 2. Significantly penalize empty properties, e.g. with a much higher council tax. This would have the nice side effect of discouraging second home ownership such as that blighting Cornwall. 3. Regulate landlords by making them more accountable and responsible for their properties. This would have the nice side effect of reversing the blight of buy to let areas and to increase the quality of rented housing stock.

It all seems so simple and so fair and sound like win-win to all but the irresponsible greedy - but unfortunately those are the people our political class are catering to.

Wednesday, December 2, 2009 11:24AM Report Comment

6. kruador said...

Reader, price rises in any market occur because the seller is encouraged to think they can ask for more, and buyers are encouraged not to press too hard. Investment buyers make up a small proportion of the market: it's the psychology of the other participants that have a greater effect. Limitations on credit availability and the cost of credit/cost of ownership are the only ways to keep prices in check.

In part I think few people are actually used to negotiating a price for anything - so much of what we buy appears at take-it-or-leave-it prices. That leaves the seller's asking price as really a base for negotiations rather than a ceiling, as it often should be. The trouble is that the price I would be prepared to pay for a property may be as much as 40% less than the seller's asking price if they're listening to surveyors and estate agents.

Wednesday, December 2, 2009 12:38PM Report Comment

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