Wednesday, January 27, 2010

Banking bonuses affect housing recovery?

Government Tax Levy on Banking Bonuses will impact UK Housing & Mortgage Market

Is it justified to claim banking bonuses could have a direct impact on the recovery or is this further scare mongering so we believe we could not live without them?

Posted by kaz @ 08:28 AM (1034 views)
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One thought on “Banking bonuses affect housing recovery?

  • Higher taxation on bankers’ bonuses could indeed “impact UK housing market”

    But, surely, a more pertinent question is, is it a bad thing?

    A banker who would have bought a mansion or a portfolio of BTL properties now wont, hence there is less support for the current price of housing stock, hence a few of those people who could not quite afford a property before now can.
    That’s a good thing IMO.

    My 2c: The negative side is that the aforementioned taxation is not really efficient, it is taxation on income, which is generally ( there may be some exceptions ) a direct result of productivity; so it’s a tax on productive activity. What should be taxed if anything, should be the use of resources in line with their scarcity and illiquidity, hence punishing unproductive activities – and in this case the level of taxation could be decided by markets not a government body making decisions. In short – we know what markets do, but we don’t use them for everything because there is a system of control in place, and those that gain from it will do whatever they an to maintain it.

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