The centrist Social Market Foundation think tank has brought forward a new policy proposal to levy “tens of billions of pounds of new taxes” on people selling houses. Essentially the plan is to replace what is widely considered Britain’s worst tax (stamp duty) with a similar duty that falls on the seller rather than the buyer. Revolutionary.
Stamp Duty is currently levied at 5% on properties up to a million pounds. The SMF is proposing a 10% “property capital gains tax” on the difference between the price a property was bought at and the price it is sold for, snatching they estimate £421 billion from homeowners over the next 25 years. It’s easy to see how this will particularly punish granny, with all her lifetime capital likely tied up in the former family home, when she downsizes the house bought decades ago. Are they trying to further freeze the already gunged up housing market?
Apart from this being electoral suicide, this is a terrible idea that will undermine the good that capital formation by families does for society. For most ordinary people the major capital asset is the family home. Wonks should stop trying to tax and fiddle about with the housing stock that already exists. The only way to really bring down prices is to increase supply…
Remember when John McDonnell claimed that nationalising the water industry wouldn’t cost taxpayers a penny? Well, wonks at the Social Market Foundation disagree. Drawing on data from academic studies, Ofwat, the London Stock Exchange and the annual accounts of water companies, the SMF have found that nationalising the water industry’s assets would initially cost £90 billion, more than the current education budget and a 5% increase in government debt levels, plus another £100 billion over the next 25 years to meet their investment requirements. Acquiring them for less than the market price would cost more in the long term as investors flee fearing further nationalisations. Guido enjoyed McDonnell’s tetchy response to the report, accusing the centrist SMF of being “right-wing”, implying they fiddled the figures at the behest of the water industry and taking a pop at its director James Kirkup:
“This is a report by a right-wing think tank, led by the former political editor of the Telegraph, and commissioned on behalf of the water industry. Labour has been clear that as established by legal precedent it will be parliament that decides the price to compensate shareholders. With returns significantly higher than bond yields the taxpayer will be better off following the return of water to public ownership.”
Who you gonna believe?