The Government should cut spending and tax further than current plans, David Laws has said in a chapter for a new Institute for Economic Affairs book on the Liberal Democrats’ approach to public spending and economics. Echoing the conclusions of the 2020 Tax Commission’s Single Income Tax, the Yeovil MP stressed the need for simplifying taxes and reducing spending to make possible significantly lower tax rates:
Future UK governments should consider a further substantial real rise in the personal tax allowance, along with lower marginal rates of tax at all income levels. This can be paid for over time by continuing to reduce the share of public spending in GDP, and by reforming and simplifying the tax system to reduce avoidance opportunities and to scale back allowances and reliefs which often give excess benefits to those on higher income levels. Corporate tax rates also need to be competitive, while bearing down on avoidance.
Laws stressed that spending reductions should be targeted to avoid the public’s priority areas of health, education and pensions. In an interview with the Sunday Telegraph, he said that the share of national income spent by government should fall to 35 per cent, a very similar level to 33 per cent recommended by the 2020 Tax Commission.
It’s clear that a growing consensus is emerging on the need for a less onerous tax burden to free up the economy to deliver the growth and prosperity we need. And it’s also clear that a growing number of commentators accept that significant simplification has to play a key role in lowering tax rates for everyone. Laws also set out the liberal case for cuts, referring to historical figures in the Liberal party and highlighting the relationship between high government spending and sluggish economic growth.
But even after the existing fiscal consolidation, state spending will account for some 40% of GDP, a figure that would have shocked not only Adam Smith, Gladstone and J.S. Mill, but also Keynes and Lloyd George. The implication of the state spending 40% of national income is that there is likely to be too much resource misallocation and too much waste and inefficiency. The liberal ambition should be for long-term total public spending growth to be restrained at below the trend rate of growth of the economy – this probably means decent real growth of health, education and pensions spending, offset by most other areas of public spending shrinking over time as a share of GDP. This objective will be made easier to deliver if we can create the conditions for faster economic growth and for lower levels of worklessness amongst the population of working age.
David Laws’ important intervention shows how the Single Income Tax can provide the basis for tax reform in a well-thought through Liberal Democrat agenda. A greater private and voluntary sector with faster economic growth. Lower tax rates and a substantially higher personal allowance. Fairer, simpler, transparent taxes without exemptions and reliefs. These are objectives that ought to appeal to serious-minded reformers across the political spectrum.
Last week witnessed a damning report on the UK tax system and the damaging impact it is having on attracting investment into Britain. Today a new report by accounting firm UHY Hacker Young paints a similarly grim picture on the overall size of the tax burden. This adds further weight to the recent withering condemnation of the government’s tax policy by major firms. UHY states that the UK is in jeopardy of “losing jobs and investment to overseas competitors” due to its hefty tax burden.
The report’s major focus for criticism is the percentage of GDP drained by the tax burden. On the narrow measure used Britain’s comes in at 34 per cent, which does not compare favourably with our competitors abroad. Japan sets a modest 23 per cent while the USA demands a similarly lithe 24 per cent. These two nations aren’t outliers, either. The G8 group of eight large industrialised nations imposes an average tax burden of just 29 per cent.
Meanwhile, with government spending at roughly half of GDP, the scope for reducing tax might appear to be limited. But something has to be done to kickstart the economy into growth and the famous words of Winston Churchill should enlighten those who claim that Britain ought to raise taxes and spending instead of cutting them more:
“I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
The 2020 Tax Commission maps a way out of our harmful taxation system and shows how to implement one that is both fair and rational. With the Centre for Economics and Business Research demonstrating that within 15 years the proposals could boost business investment by 61.2 per cent and GDP by 8.4 per cent, policy makers cannot avoid the central recommendations of the report: a reduced tax burden, a simpler tax system, and fewer taxes.
It’s worth bearing in mind what 8.4 per cent higher GDP would mean to ordinary taxpayers, too: an extra £5,000 for every family in the country, a much needed and long overdue relief for those of all incomes. Politicians and officials do not have to look any further for the answer to the UK’s notorious tax woes. It’s time they started getting to work implementing the Single Income Tax.
All of the talk on taxes this week has been about Jimmy Carr, Take That and notions of fairness. But we shouldn’t forget that staggeringly high taxes could have huge economic costs, too. Unless significant changes are made, we’ll continue to suffer from lost investment and lost jobs. A report by Ernst and Young, forecasts an uncomfortable and uncertain future for the UK, predicting that within just two years we could lose our crown to Germany as the leading destination for foreign direct investment (FDI) in Europe.
The Ernst & Young research shows a 7 per cent drop in the number of foreign projects in the UK compared to 2011. A particular concern was the 15 per cent drop in investment in one of the UK’s strongest areas, financial services. Few will be surprised that high taxes were identified as one of the key obstacles to investment in the UK.
Despite the Chancellor’s reduction in Corporation Tax at the last Budget, barely half of investors claim that the UK tax regime is attractive. But there is a way out of the mess. The fundamentally simplified approach to taxation outlined in the final report of our 2020 Tax Commission centres on a Single Income Tax on both labour and capital of 30 per cent that would reinvigorate our ailing economy. That simplification involves abolishing National Insurance, abolishing Corporation Tax and abolishing Capital Gains Tax. The impact on business and consequently on jobs, incomes and living standards would be substantial.
Economic modelling of the Single Income Tax carried out by the Centre for Business and Economics Research shows that it would boost business investment by 61.2 per cent within 15 years. That extra investment would in turn transform the economy, too. Also over 15 years, our proposals would boost GDP by 8.4 per cent. That’s an extra £5,000 per family. In his 2010 Budget speech, George Osborne said ‘I want a sign to go up, over the British economy, that says “Open for Business”’. If he’s serious about that, he has to act and he has to act now.
For the third day running, The Times has splashed on elaborate tax avoidance schemes used by the rich. Today’s story (£) is about investors using special schemes designed to support the film industry. Yesterday’s (£) was about Icebreaker, a music and intellectual property development company connected with Take That crooner Gary Barlow, which an unrelated tax adviser has claimed provides investors with major tax avoidance opportunities. Both Icebreaker and HMRC have refuted the claims. On Tuesday Jimmy Carr featured (£) in a story on a different scheme called K2, which works by arranging for customers to transfer their income into an offshore trust which is then loaned back and is not subject to tax. The front page media attention is particularly unfortunate for the comedian. He roundly mocked tax avoidance when he presented The 10 O’Clock Show on Channel 4, performing this sketch:
Jimmy Carr today tweeted a grovelling apology and promised that he would “in future conduct my financial affairs much more responsibly”. Beyond the frankly less-than-shocking celeb-hypocrisy angle, the story reveals an interesting aspect to the cat-and-mouse game of tax avoidance played by the rich, their tax advisers and HMRC. Undercover reporters filmed practitioners apparently discussing how they could swerve around roadblocks put in their way. The many choice quotes in the piece ultimately amounted to variations on this theme:
“The Revenue closes one scheme, we find another way round it”
Our mind-bogglingly complex, Byzantine tax system, riddled with special schemes and particular rules that don’t seem to fit in with the whole is what happens when politicians continually apply patches to fix a system that is fundamentally broken. Closing loopholes and removing distortions here and there amounts to little more than pointless tinkering – however much the individual measures might make sense in isolation. The resulting complexity and the punishingly high tax rates that creates ends up inevitably with people like Jimmy Carr trying to avoid their liabilities. Those with enough money to pay specialists to minimise their tax bill will do so. Clever accountants and lawyers will continue to outsmart HMRC, who appear to be struggling to keep up with the legislation passed in parliament. As The Times noted in Tuesday’s leading article (£):
“Can the Government blame people who avoid tax when the top rate is, by international standards, high, when the system of reliefs is Byzantine and easy to exploit and when the HMRC is so outgunned? Taxes should be lower. They should be simpler.”
It’s no use for the Prime Minister to grandly pontificate about the morality of people trying to avoid his Government’s extortionately high taxes. Politicians must now accept that they have lost control of the tax system. Tinkering with specific schemes simply leads to new avoidance opportunities opening up, often discovered within days of old ones being closed. The only agenda for anyone seriously interested in fair taxes is a complete overhaul.
Last month we published the Single Income Tax, the final report of the 2020 Tax Commission. It outlines a plan for dramatically simpler, substantially lower taxes that would remove distortions, loopholes and drastically reduce the incentives – and opportunities – to minimise punitive tax bills.
The Single Income Tax might not have stopped schemes like K2, which appears to be in a legal grey area under current law. But it would free up HMRC resources to focus on what matters and what they should be doing: investigating what they believe are egregious actions. It would also put a stop to the kind of scheme revealed in today’s Times. The simple 30 per cent Single Income Tax rate would have no special exemptions, reliefs and exclusions. And it would also close off suggestions related to the Icebreaker scheme that a combination of loans could offer a tax advantage: under the Single Income Tax all income types would be taxed at the same rate and would be taxed only when distributed to individuals.
Millions of ordinary taxpayers get sent the wrong tax bill at the wrong time by an incompetent HMRC. Small and medium-sized businesses feel they cannot get on with things and create prosperity because they forever feel the breath of HMRC down their necks. Anyone who thinks it’s time that Jimmy Carr, Gary Barlow and City bankers – or anyone else – should pay their fair share must accept that serious tax reform is the only realistic way to fix our broken tax code. Lower rates, simpler rules, no exceptions. In other words, the 2020 Tax Commission’s Single Income Tax.
Hugo Rifkind – a columnist and leader writer for the Times – wrote this morning about how a proportionate income tax could simplify the tax system and help stop the tax dodging which increasingly means we can’t trust everyone is paying their fair share. That doesn’t mean though, that he entirely agrees with the plan we outlined in our Single Income Tax report with the Institute of Directors. In a discussion on Twitter, he argued that we should keep Inheritance Tax, whereas we argued the tax should be scrapped in Section 220.127.116.11 of the report.
To explain why I think Inheritance Tax is not just dysfunctional but outright wrong, I think it helps to borrow a quote from one of the best films of the last decade, Memento:
I have to believe in a world outside my own mind. I have to believe that my actions still have meaning, even if I can’t remember them. I have to believe that when my eyes are closed, the world’s still there. Do I believe the world’s still there? Is it still out there?… Yeah. We all need mirrors to remind ourselves who we are. I’m no different.
Leonard Shelby, the film’s hero, takes pretty much no utility from his vengeance. He is almost immediately dead to the consequences of his actions, thanks to a brain injury that has removed his ability to form new memories. However, he still wishes to do right by those he loves. Whatever we think about his seeking vengeance, who would quibble with the idea that when we close our eyes the world is still there?
I don’t think it is too much of a leap from what happens to Leonard when he forgets whatever he has done to ourselves when we die. Our eyes have been closed but the world is still there. The interests of the dead continue to exist after they have died and should be respected. Inheritance Tax is not a tax on the unearned wealth of the person inheriting any more than income tax is a tax on unearned wealth if the income is to be spent on providing for children. It is a tax on the dead who earned that wealth while living.
Inheritance Tax is a particularly egregious attack on the interests of those who die because it strikes not only at the financial security they wish to provide for those left behind but also at the home that they all shared. The family home is a crucial part of the stability that many people, when considering their own deaths, would want their family to be able to maintain for as long as they felt it necessary. A tax bill of tens of thousands of pounds that forces them into a hasty sale of their home and the fresh trauma of relocation is an alarming prospect to anyone considering the fate of those they care about.
The idea of a tax on the interests of the dead isn’t some abstract, academic ethical argument. I think it underlies massive popular hostility to the Inheritance Tax. It is why the arguments of many left-wing intellectuals continually fail to move the public on this issue. The same utilitarian minds that conceived of happiness economics cannot reconcile themselves to the idea that people care so much about something that will bring them no personal happiness. This is an issue where conservative principles are much more in touch with the intuitive understanding of ordinary people. They don’t think that around half of one percent of government revenue is worth the price of their family facing additional hardship when they are first unable to look after them directly. Pretty understandable really.
In the end, even if you don’t share the outlook of those who consider the world after they have died so important, isn’t the instinct still noble? Isn’t caring so much about something you’ll never see humanity at its best? For so little revenue, so little benefit to those public spending is supposed to help, is it worth taking a swipe at this supreme expression of the familial bond?
Inheritance Tax means taxing people more if they use the money they earned leaving it to children, rather than spending it while they’re alive. I think that decision should be nothing to do with the tax system.
Economic growth under Elizabeth II is the highest under any monarch at 2.4 per cent, higher than Victoria’s 2 per cent and William IV’s 2.2 per cent. But, as Larry Elliott of the Guardian asks, should it have been better still?
The real story of the past 60 years has been of potential squandered. Britain has grown richer, but other countries have grown richer faster. What’s more, the economy has become more unbalanced and its foundations shakier.
Indeed. Britain’s bloated public sector has unbalanced our economy and the huge budget deficit means the foundations are dangerously shaky, as Greece is discovering. But it could have been better.
If Government spending would have been kept at the 33 per cent share of national income recommended by the 2020 Tax Commission from Elizabeth II’s coronation until 2009, the economy would by then have been 91 per cent bigger than it actually was. Instead of being 3.7 times richer than we were in 1952, we would have 7.1 times richer instead. Adding a per cent or so on growth every year over nearly 60 years makes a big difference.
An actuary, so goes an old joke, is someone who thought the sheer thrill of chartered accountancy seemed like too much excitement. The problems with pensions may be huge in scale and almost universal in their impact, but facing up to them often just seems too dull and uninteresting for all but a select group of doughty actuaries and pensions professionals who have been pointing out the alarming consequences of issues such as a rapidly aging population and permanently sluggish trends for economic growth.
The Single Income Tax, the 2020 Tax Commission’s proposal to radically simplify and reshape direct taxes, tackles these problems head on. But fairness is at the heart of the proposals, and the report warns that without careful planning some groups might be caught in the transition from the current system to the Single Income Tax. The TaxPayers’ Alliance is firmly committed to opposing every tax rise as one of our core principles. Pensioners paying the basic rate of Income Tax are one such group the report cautions governments not to disadvantage in the transition.
“there would need to be a delay before the introduction of some of the recommendations, so that individuals and businesses that have made decisions based on the current tax system do not face too much disruption.” – p.30, The Single Income Tax
Generally, pension funds would enjoy a substantial boost from our proposals. Now, asset values are hit by transaction taxes which gum up markets, hit by corporate taxes when they make a profit, and then hit again by Capital Gains Tax when they are sold. And all that’s before Income Tax on dividends. We propose to abolish all those taxes and reform Income Tax into our Single Income Tax. A recent study indicated that abolishing Stamp Duty alone, which then raised about £4 billion a year, might increase the value of shares by £150 billion, which are largely owned by pension funds. Capital Gains Tax and Corporation Tax currently raise almost £50 billion. Their abolition would be likely to increase share values by a substantially larger margin than Stamp Duty.
But share values are also significantly influenced by expectations of economic growth. The Centre for Economic and Business Research has calculated that our plan would boost trend growth every year by 0.4 per cent. It doesn’t take long for this to make a big difference. They calculate that after just 10 years, the economy would be 5.9 per cent larger than it would otherwise be, and 9.3 per cent larger by 2030. That would mean higher expected profits and dividends which would in turn lead to higher share values now.
So beleaguered defined-benefit pension funds, including many suffering worrying deficits, would receive a major boost from our plan. In addition, our reforms exempting UK companies from tax when they transfer money to other UK companies would free up pension contributions, so employers could pay pensions contributions directly into pension funds tax free, sweeping away complex and unnecessary rules and restrictions.
In addition, pensioners are considerably more likely to directly own property and shares than the population, because they have had the time to build up assets. So not only will pensioners benefit from the gains to asset values owned by pension funds from the abolition of Stamp Duty, Capital Gains Tax and Corporation Tax but they will also gain directly when they sell their own assets.
Despite these huge gains for pensioners in general and the more generous personal allowance under our proposals (the Government plans to freeze the more generous personal allowances for people born before 6 April 1948 so that inflation will make them gradually less valuable), some would still be at risk of losing out from the merger of Income Tax and National Insurance to a Single Income Tax rate of 30 per cent, because pensioners currently enjoy the advantage of being exempt from National Insurance. So instead of the combined rate falling from 40.3 per cent to 30, as it would for basic rate taxpayers under the pension age in work, it would mean a rise from 20 per cent.
Because it would be too late to expect pensioners to adjust their plans accordingly or fully benefit from the wider reforms, it would be unfair if the Government did not account for this. So we would suggest the Government consider two options. Firstly, pension funds could be mandated to increase pension payments to ensure everyone receives at least the same income after the new 30 per cent tax rate. However, once personal allowances are factored in, funds would need to raise their payments by up to 10 per cent to ensure every pensioner would be better off. For example, if all payments were increased by 10 per cent, a 70 year old pensioner paid £15,000 by a fund would have received £13,988 after tax, last year. Under the Single Income Tax, that pensioner would have been £562 better off. Meanwhile, a pensioner paid £40,000 would have been £305 better off.
While ensuring pensioners benefit from the increase in values in their funds, this might not be possible as funds covering annuities tend to hold assets such as Treasury gilts which would be less likely to rise in value as much as shares. It would therefore require detailed study by the Government.
The second option would be to let pensioners whose pensions had already been settled retain the 20 per cent rate for the first £33,000 of taxable pension income. This could be combined with a one-off tax on settled schemes where the other tax reforms have increased their value, to ensure everyone benefits from the reforms. As with the first option, this would require detailed technical study that was beyond the remit of the 2020 Tax Commission.
The British tax system is a complicated mess that requires radical root-and-branch reform to help restore incentives and growth into the economy. The Government must not shy away from this challenge. But it must also protect pensioners and others who have made decisions and arranged their affairs according to the current system. The 2020 Tax Commission’s Single Income Tax can achieve both of these objectives.
City AM has published a superb chart on whether or not you have to pay VAT on your lunch under the recent u-turn on the rules.
The City AM chart, by Lizzie Fournier, shows just how ridiculously complex the rules on VAT are. But while VAT rules are unfair and overly complicated, the Government’s so-called simplification did little more than shift the boundary of unfairness from one area to another. Instead of tinkering around with the rules on VAT that provide no real simplification benefits, the Government should take a look at the 2020 Tax Commission’s final report ‘The Single Income Tax’ and get to work on implementing its serious yet radical measures to truly simplify Britain’s absurdly complicated tax code.
Happy Tax Freedom Day! UK taxpayers have finally stopped working for the taxman and started working for themselves. But as it’s almost June, perhaps we shouldn’t be jumping for joy.
The Adam Smith Institute calculates Tax Freedom Day every year. For 149 days of 2012, every penny earned by the average UK resident will have been taken by the government in tax. And the problem’s got worse too – this year’s Tax Freedom Day falls two days later than it did in 2011.
The ASI says that freedom from the state actually occurs on 23 June, when you add in the cost of borrowing. Our research at the turn of the year factored in the cost of regulations, which means that the Cost of Government Day will extend as far as 26 July this year.
The ASI’S annual calculation is a vital reminder that we are overtaxed in the UK. Last week we released the final report of the 2020 Tax Commission, which recommended that the overall burden of taxation should fall to 33 per cent of GDP. If that happened we’d see better news from the ASI, instead of finding out that Tax Freedom Day is occurring later and later every year.
Small is best. That’s the finding from an economic research paper published today by the Centre for Policy Studies (CPS) which looks at the economic performance of advanced economies with big governments and compares it to the performance of those with small governments. Their conclusions might be nothing new, but it’s certainly helpful to have a new paper to add to the mountains of evidence all pointing in the same way on the question of whether our government is spending too much of our money.
The 2020 Tax Commission published ‘The Single Income Tax’ on Monday, which includes a review of the literature on the effect of the size of government on economic growth. It also recommends reducing to 33 per cent of the nation’s wealth the proportion of national income that the Government spends. Despite all the evidence, Nick Pearce of the IPPR and others still cling to a delusion that “the empirical evidence doesn’t support” the inverse correlation.
Ryan Bourne and Thomas Oechsle have updated the evidence in their CPS paper, incorporating the last 10 years of data and new countries such as Estonia. The numbers in their updated report using robust regression analysis confirms the story from the existing literature: a 10 percentage point cut in the government’s share of GDP per capita adds around 1.1 per cent to per capita economic growth figures every year. Over many years, that adds up to a lot.
The CPS’s estimate of the correlation is on the conservative end of the spectrum. But what if the CPS estimate was applied to the 2020 Tax Commission’s recommendation for government spending at 33 per cent of national income? If you started at 1965, by 2009 GDP would have been 43 per cent higher. That means instead of being £22,190 per person, it would have been £31,817.
But not only would individuals and families have been a lot better off with both much larger earnings and much lower taxes, our proposals would have meant a lot more money for the public sector, too. Even though government spending ballooned to £601 billion or 47.6 per cent of GDP in 2009-10, under 2020 Tax Commission proposals it would have been £604 billion. A smaller fraction of a bigger pie would have meant a bigger slice for the public sector.
The Government is defending new taxes on everything from pensioners’ incomes to Cornish pasties on the grounds that they need to make the tax system fairer and simpler. Unfortunately the Chartered Institute of Taxation has taken a look at the Finance Bill, the legislation that implements the changes announced, and found that it is the longest ever at 670 pages. And Tim Wallace at City AM points out that there are another 508 pages of explanatory notes. Of course, that doesn’t necessarily mean that taxes aren’t being simplified. It probably would take a lot of legislation to fix Britain’s dysfunctional tax code. But the more you look at the detail of this Budget the more the complications look as significant as the simplifications.
Age-related allowances are going, for example. That will simplify taxes, though there would have been much fairer ways to achieve that which didn’t mean taxing some pensioners so much more. But then at the same time the Government has introduced an overall limit on unlimited reliefs – for things like charitable donations and losses – that looks like it will be a disaster in practice.
Major charities are complaining that it will put them in serious trouble and very nasty results could be created for some people. If someone makes a big gain one year, a big loss the next, but the relief on the loss is limited, then they could wind up paying loads of tax on no income. There has to have been a better way of cracking down on exploitation of the rules, or looking at the fundamental problems in the tax system that created the loophole.
Some VAT reliefs are going on things like pasties and static caravans. That will mean higher taxes for people who buy them and just move the goalposts, so that different distinctions between products create new complexities in the tax code. All of a sudden the tax man has to care about the temperature of your pasty, for example, or it might still escape VAT.
Even if that does simplify the tax code. Again it has to be balanced against the way they’ve addressed the very real problem of foreign buyers avoiding Stamp Duty. They have made that tax, which the IFS Mirrlees Review had said should be abolished it is such a mess, even more complicated. And they’ve also introduced a new wealth tax on an extremely small base, altering the basic principles of Britain’s tax system to bring in £65 million, about 0.1 per cent of government revenue. Again they could have found a fairer way of doing it. Just close the Stamp Duty loophole itself, or ideally look at replacing that tax wholesale with new rules.
That is without even getting into the Child Benefit mess.
This was supposed to be a more careful Treasury, which was careful about fiddling with the tax system, to avoid nasty unintended consequences. But instead it has managed to combine unpopular measures to simplify some taxes by making people pay more, with dramatic changes in legislation that make the system a lot more complex without achieving very much. It all makes the good news which will mean most families pay less overall, like the increase in the Personal Allowance, fade into the background.
That’s the problem with revenue neutral tax reform, it often creates lots of losers and new dysfunctions in the tax system no matter how much hard work politicians and officials put in during the run up to the Budget. Tax reform without tax cuts tends to be a political nightmare. But, at the same time, tax cuts without tax reform are a missed opportunity. We need both.
It looks like at the Budget we’ll have the announcement of new property taxes. Reports suggest there will be a higher stamp duty rate for high value properties. That would be a repeat of the same approach taken by Gordon Brown more than once. Some commentators are applauding it as an economically rational move to tax property rather than income, but is that actually what is happening?
No. The revenue from new taxes on very high value properties will likely be underwhelming. Taxes on labour income – Income Tax and National Insurance contributions – raise over £250 billion each year. Capital Economics have estimated the new Stamp Duty rate could raise £400 million a year, just 0.1 per cent of the amount raised by those labour income taxes. Maybe George Osborne will find a way of extracting more than that. But even if he raised ten times as much it would still not be enough to cut a penny off the basic rate of income tax.
This just won’t be the rerun of the switch from taxing income to taxing consumption in the 1980s that helped finance substantial cuts in marginal income tax rates, though those lower rates actually largely financed themselves. There aren’t enough very high value properties for a tax on them to raise a lot of money.
If politicians try to tax property more broadly they will find it is extremely unpopular. It is no accident that our grassroots campaign has always been focused on Council Tax more than any other tax. First time buyers find it incredibly hard to pay Stamp Duty. In the United States, tax revolts have often responded to high property taxes and academic research suggests those taxes are particularly salient. Britain already raises more in property taxes than any other developed country, taking a fiscal windfall from the high prices many families struggle to pay a mortgage on, and if politicians try to raise even more from property they’ll be voted out of office.
Higher taxes on a small number of very high value properties might be a useful political gesture for George Osborne. It is no substitute for the grander vision for the tax system that Allister Heath rightly argues he needs to set out today.