A Mansion Tax is a very bad idea
Sep 2014 23

And here’s why.

It’s unfair

  • Why should people who purchased properties that have appreciated in value be subject to an arbitrary annual penalty? More here.

Politicians can’t be trusted

  • Eventually this tax will be extended to more home owners. As with Stamp Duty, thresholds will be lowered and/or frozen and rates increased while house prices go up.  This is the case with all new taxes.

Property is already heavily over-taxed

  • Britain already has the highest property taxes in the developed world. At 4.2 per cent of GDP they are more than double the OECD average.

It would be an administrative nightmare

  • How would further appreciation be treated? Given than house prices increased by 8.4 per cent in 2013, more and more 2 bedroom flats will become “mansions” in the near future.
  • How this would be assessed is unclear. Would there be a revaluation every few years or would average price increases be applied for each local authority? The first approach would be very expensive whilst the latter would be inaccurate and open to legal disputes.
  • Perhaps there would also need to be a “Home Improvements Inspectorate” to make sure owners of homes close to the threshold weren’t surreptitiously building conservatories to turn their terraced houses into “mansions.”

It would distort the market

  • In the five months after the 7 per cent Stamp Duty rate on properties over £2m was introduced, the number of properties sold by Savills between £1.8m and £2m increased by 37 per cent compared to the same months in the previous year. Yet the number of sales between £2m and £2.2m, just over the new threshold, fell by 29 per cent. Some of this distortion was exacerbated by the clumsy slab basis on which Stamp Duty is calculated. But a new tax on high value properties would have much the same effect. More research is here.

It’s illogical

  • Someone living in a £1.9 million mansion in Surrey with a 1,000 home buy-to-let empire worth hundreds of millions of pounds would theoretically pay no Mansion Tax.
  • But a widow living off meagre savings in a central London home bought in the 1970s which has risen in value to over £2 million would face an annual penalty.
  • The BBC’s Robert Peston believes that “Labour will allow cash-poor mansion owners to roll up the tax they owe, and pay it only when they sell up or die.”
  • So instead the penalties will be passed on (along with 40 per cent Inheritance Tax) to grieving families when the widow dies.
  • Or what if they sell the house? If the tax becomes payable then, that would constitute a large and increasing disincentive for such people to move homes, further gumming up the property market. This would result in a misallocation of residential property assets.
  • If it’s deferred till death, however, that just means short term receipts will be even smaller. And it will be odd that someone with a big tax liability connected to a house doesn’t have to pay it, even though they’ve sold it and pocketed a large sum. Even worse – what happens if the value goes down? Are they still expected to pay this bill even though it wasn’t worth so much when they sold it?

The NHS can improve how it spends taxpayers’ money

  • A quick Google search for “NHS cash crisis” between the dates of 2001 and 2008 will bring up countless tales of the imminent financial collapse of the health service12345 at a time when its budget was being increased at a historically unprecedented rate. Despite the latest funding issues the NHS still has the money to employ Third Sector Environmental Sustainability Leads, Car Park Sustainability Officers and Administrators of Green Travel Facilities.
  • Throwing more money we don’t have into an inherently wasteful and inefficient system is counterproductive.
  • In 2010 the National Audit Office said that:

Over the last ten years, there has been significant real growth in the resources going into the NHS, most of it funding higher staff pay and increases in headcount. The evidence shows that productivity in the same period has gone down, particularly in hospitals.

  • There’s no reason to think this time things would be any different without politicians accepting this reality and dealing with it.
Revealed: The taxpayer-funded £108 million trade union subsidy
Sep 2014 09

 

New research by the TPA can reveal that trade unions received at least £108 million in subsidies from taxpayers in 2012-13, just £5 million less than in 2011-12. Our comprehensive survey shows shows that trade unions received an estimated £85 million in paid staff time (facility time) plus £23 million in direct payments in 2012-13. The research also demonstrates that public bodies are often deducting trade union subscriptions in the payroll process without charging the unions for that additional administrative support, despite union claims to the contrary.

The Cabinet Office has made strides to eliminate facility time, but far more must be done. This report demonstrates why these reforms must go further to include all of the public sector rather than just Whitehall and its quangos. In 2012, the TPA published a legal briefing that made it clear that public sector bodies are failing to control facility time as envisaged by employment law. This latest report reveals that hundreds of public sector bodies are still failing even to record the extent of facility time.

You can read the full report into this scandalous subsidy here.

Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:

It is simply wrong that taxpayers continue to see their money used to pay thousands of trade union activists who organise strikes which disrupt the services that they rely on and pay for handsomely. Thousands of staff who should be working for the taxpayer are working for the trade unions instead. It’s welcome that the number has fallen, but far more must be done.

Tens of millions of pounds are being wasted and supporting aggressive political campaigns. The Government must crack down on this scandalous subsidy.

 

Announcing ThinkTent 2014 at Conservative Party Conference
Sep 2014 03

We’re delighted to announce that together with the Institute of Economic Affairs, Business for Britain, and the Free Enterprise Group of Conservative MPs, the TaxPayers’ Alliance will be hosting ThinkTent 2014 at this year’s Conservative Party Conference, kindly supported by Mastercard.

The ThinkTent will be a place for open and honest debate about some of the biggest issues Britain will face in the run up to the election, and on into the next decade. From Europe to the tax code, the “cost of living crisis” to financial regulation, we will leave no stone unturned. We’ll be joined by a host of Cabinet Ministers, MPs, as well as key commentators and thinkers. We are sure that each event will be fascinating.

You can view the full programme of events here. For those of you attending Conservative Party Conference, we’d be delighted to see you; for those who can’t make it, we’ll be live-tweeting our events on our twitter feed as well as blogging on this page throughout Conference.

NEW RESEARCH: The taxman chases you all the way to the departure gate
Aug 2014 22
New research from the TaxPayers’ Alliance shows that punishingly high taxes on holiday items, insurance and flights have forced up the cost of a holiday abroad by £50 to every holidaymaker in Britain.

The TaxPayers’ Alliance has collated the cost of VAT on “holiday goods” such as sun tan lotion and a hair cut, the Insurance Premium Tax, and Air Passenger Duty – the highest tax on flying anywhere in the world. Due to increases in VAT and Air Passenger Duty,the overall figure has increased from our 2008 estimate of nearly £1.5 billion to nearly £1.9 billion this year.

At the extreme end, a family of four travelling to Florida this summer will have faced an average tax bill of £364 on their flights and holiday purchases in the UK, an increase of £164 since 2008. A family of six travelling to Spain will have been hit by an average tax bill of £195 just for going on holiday.

Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:

“It’s wrong that a week in the sun comes with such a huge tax bill, as the taxman chases holidaymakers all the way to the departure gate. These taxes are not only too high but hit those on lower incomes the hardest, making it more difficult for hard-working people to get away for a well-deserved break.

“Too many of the taxes we pay are hidden. Who knew that there is a tax on travel insurance?

“These stealth taxes are unfair and must be abolished. It’s time for the Chancellor to give families a break.”

Cardiff Says No to the Sugar Tax
Aug 2014 11

Supporters of the Taxpayers’ Alliance were in Cardiff on Saturday campaigning against Plaid Cymru’s proposed tax on fizzy drinks. With our stall set up on ‘The Hayes’ during the annual Cardiff Carnival, we got to meet many local people and visitors shocked to hear about the punitive measures being taken to try to cut obesity in Wales.

With 300 bottles of soft drinks, leaflets and sign-up sheets we spent over an hour raising awareness on how additional taxes on everyday items such as soft drinks could actually in the long-term have really significant impacts on hard-pressed taxpayers’ budgets. After hearing about failed attempts elsewhere to introduce taxes to curb obesity rates, many added that they would be reluctant to support any further taxation asking ‘Where would taxation stop otherwise?’ 

With local support we quickly handed out all of our soft drinks and spoke to a few hundred different people. Both locals and visitors to Cardiff were delighted to have a group such as the TPA tackle head on the issues that affect them daily especially when so many people feel that politicians are completely out of touch.

I personally would like to thank everyone for their hard work on the day and for the people of Cardiff who were so welcoming.

War on Waste rolls into Canterbury
Aug 2014 07

Yesterday The TaxPayers’ Alliance took the War on Waste to Canterbury. Stationed outside the Beaney Library we split off into pairs to cover as much of the street as we could, thankful for the excellent weather despite forecasts to the contrary.

With signup sheets on hand and were focussed on raising awareness of local government waste by handing out leaflets. People were particularly outraged to learn of the £18,181 claimed in expenses by the council chief – on top of his £135,000 salary.

Many people stopped to learn more about our figures and how we had collected them while others were unsurprised (“What do you expect? They’re politicians!”) but delighted to know that there was a group drawing attention to these issues. More than once we were asked for directions to the cathedral or nearest restroom which is always a hazard when wearing matching t-shirts.

We left a sunny Canterbury with many new supporters, having had a thoroughly enjoyable day!

TaxPayers’ Alliance reveals the 2,181 council staff earning more than £100,000
Aug 2014 05

The TaxPayers’ Alliance is proud to present the eighth Town Hall Rich List, the Who’s Who of senior local government executives which details the job titles, full remuneration and many of the names of all local council employees whose remuneration exceeds £100,000.

Praised in the past by politicians on both sides of the House of Commons, the Town Hall Rich List remains the definitive guide to senior executive pay in local government, making it a vital tool for taxpayers wanting to judge which authorities are delivering the best value for money.

Click here to read the full report, including detailed breakdowns for each council

Click here for the data in an excel spreadsheet

Executive pay in many town halls across the UK continues to be insulated from economic reality, despite the urgent need to find savings and the fact that many councils claim that they have insufficient cash to fund frontline services, and enforce pay freezes on their rank and file staff.

The key findings of the research are:

  • There were at least 2,181 council employees who received total remuneration in excess of £100,000 in 2011-12, a fall of 5 per cent on the previous year’s 2,295.
  • Despite this, 93 councils increased the number of staff who received remuneration in excess of £100,000 in 2011-12.
  • These six-figure remuneration packages cost the taxpayer nearly £300 million in 2012-13
  • Knowsley Council more than doubled the number of staff who received remuneration in excess of £100,000 in 2012-13 to 15, the biggest increase of any local authority.
  • The figure of 2,181 is almost certainly an underestimate. The opacity of some councils’ accounts makes it impossible to separate teaching staff from council staff. To ensure accuracy, any data about which we were unclear and would have shown more council employees receiving £100,000 or more in 2012-13 has been omitted.
  • In 2012-13, there were 542 council employees who received remuneration over £150,000.
  • Of these, 34 council employees received remuneration in excess of £250,000.
  • The council with the most employees in receipt of remuneration over £100,000 in 2012-13 was Glasgow with 32. There were 52 councils with at least 10 employees receiving more than £100,000 in 2012-13.
  • The council employee with the largest remuneration package in the UK in 2012-13 was David Crawford, the Executive Director of Social Care Services at Glasgow Council who received £486,303. That total included a considerable redundancy package.
  • The highest paid council employee, excluding larger than usual, one-off payments due to redundancy or retirement, was received by I. Craig, Managing Director of Lothian Buses, a subsidiary 91 per cent owned by the City of Edinburgh Council who received £300,081.
  • The highest paid council Chief Executive not in receipt of one-off payments due to redundancy was Paul Martin, Chief Executive of Wandsworth Council, who received £274,224.
  • The largest remuneration package in Wales in 2012-13 was received by Jonathan House, Chief Executive of Cardiff Council, who received £258,006. Cardiff Council also had the most employees receiving remuneration in excess of £100,000 in 2012-13 with 9.
  • The largest remuneration package in Scotland and highest in the UK was David Crawford, Executive Director of Social Care Services at Glasgow Council, received £486,303, in 2012-13. Glasgow also had the most employees receiving in excess of £100,000 in 2012-13 with 32.
  • The largest remuneration package in London in 2012-13 was Paul Martin, Chief Executive of Wandsworth Council, who received £274,224. Wandsworth also had the most employees receiving remuneration in excess of £100,000 with 29.

Jonathan Isaby, Chief Executive of the TaxPayers’ Alliance, said:

It is good news that the number of senior council staff making more than £100,000 a year is falling, although that may only be because many authorities have finished paying eye-watering redundancy bills.

“Sadly, too many local authorities are still increasing the number of highly paid staff on their payroll. It’s particularly galling in places where councils are pleading poverty and demanding more and more in Council Tax. Taxpayers expect their council to be filling potholes, not pay packets. Many rank-and-file staff in local councils will be equally appalled – at a time when councils across the country are freezing pay, it appears the money they’re saving is being used to line the pockets of town hall tycoons.

Destination Luton for APD Campaign
Aug 2014 01

On Thursday, five people and a cardboard cut-out set out on a noble quest: to persuade the good people of Luton Airport to support our campaign to abolish Air Passenger Duty (APD), a tax levied on all people flying out of the UK. After marching dramatically (well, taking a train) to Luton Airport, we set up a stall in the lobby outside the departure lounge, put on our armour (TaxPayers’ Alliance t-shirts) and primed our clipboards for battle. Armed with facts and figures, we were prepared.

Fortunately, our campaign was not as perilous as implied above. People, especially at this time of year, know they are affected by the high cost of flying. However, when I asked “Are you aware how much of your money is going directly to politicians through Air Passenger Duty?”, none knew the answer.

Most were shocked when they found out that when flying in economy class on a short-haul flight, they were paying £13 directly to the Treasury. £13 of their hard-earned money which was not going towards improving their flying experience in any way.

On the whole, the public reaction was positive, with many keen to sign up to our campaign. After our visits earlier this week to Bristol Airport and Liverpool John Lennon Airport, support for the abolition of APD is growing stronger each day.

If you are reading this and are among the millions of people due to head off on their summer holiday this month, enjoy your flight! Hopefully, the Chancellor might make it a little more affordable soon.

Holiday Tax Campaign Arrives in Liverpool
Jul 2014 31

On Wednesday, three of us from Tufton Street made our way to Liverpool John Lennon Airport to continue our week of campaigning against Air Passenger Duty (APD), calling on the Chancellor to axe the hated Holiday Tax.

Two lattes, three trains and four hours later, we finally arrived and unpacked. Our stand was set up just as holidaymakers headed to departures, which meant we had an audience of flyers who at this time of the year are all too aware of the painful effect that APD has on the price of going away.

We campaigned with two additions to the team: David, a wonderfully engaged local activist and Hector the Taxman, a cardboard cut-out of the 1990s HMRC cartoon. We got a lot of entertainment from photographing Hector in departures, in duty free, and of course, posing with the John Lennon murals. It appears we have found the real Fifth Beatle! David, who also joined us on our War on Waste Roadshow when we stopped in Liverpool, was rather more active than Hector however.

We generally had a good reaction to the campaign, especially amongst families, when having to pay the £13 charge on a short-haul flight for every family member really makes a difference. Staff at the airport were also particularly sympathetic. After all, a reduction in APD would increase traffic through the airport and create more jobs too.

Going home, we were pleased with the progress that the campaign is making so far, spreading the message across the country. APD is a tax that hits ordinary people and businesses alike – it doesn’t make sense, after all, for the Government to tell firms to export across the world and then charge punitive rates on exploratory visits – and we’re hopeful that the Chancellor will listen to country when he stands at the Despatch Box to deliver the Autumn Statement later this year.

COMMENT: We need a proper MPs Recall Bill
Jul 2014 30

Yesterday Andy Silvester wrote on the Spectator blog, arguing for a proper Recall Bill.

There seem to have been few people who did not offer their two cents on David Ruffley. From domestic violence charities to his political opponents, in the chattering classes and in the blogosphere, all kinds of people felt the need to share their opinion about whether it was appropriate for the Bury St Edmunds MP to remain in Parliament after accepting a police caution for assaulting a former partner.

Click here to read the article in full

Avon and Somerset need bobbies on the beat, not flower power
Jul 2014 25

Avon and Somerset Police have spent £5,000 on a flower garden, in an effort to reduce local crime rates. The idea is that a communal area will reduce anti-social behaviour. As a result, the regenerated part of St. Andrew’s Park becomes another area of questionable policies in Bristol, after the mayor’s proposal of “Residents’ Parking Zones”  . While the new garden is no doubt pleasant, it’s effectiveness in cutting down on crime is clearly an area of doubt. This sort of item is for local councils, not police budgets.

As our Chief Executive Jonathan Isaby told the Telegraph, we worry that police might spend more of our money on similar woolly schemes, which shouldn’t be their responsibility. Local police budgets should be used on more effective, proven methods. The need to focus on core responsibilities is especially acute when Her Majesty’s Inspectorate of Constabulary has made it clear in their recent report that forces will have to cut spending in the coming years. Many forces have already dramatically reduced the number of ‘bobbies on the beat’. How can these police forces spend that same money on such oblique methods?

Nobody can object to the flowers brightening up the area. But the money should come from the appropriate place, preferably a local fundraising scheme. It seems that the police are wasting their time and taxpayers’ money on something that shouldn’t concern them.

Could a Mansion Tax make our housing markets even more dysfunctional?
Jul 2014 15

In today’s Daily Telegraph Jeremy Warner makes two very interesting points on the UK’s housing market dysfunctions and some commentators’ hopes that a Mansion Tax will do anything to fix them:

Britain already has the highest property taxes in the OECD (see chart), mostly in the form of council tax. Some claim a higher purpose to property taxes than merely soaking the supposed rich – that of putting a lid on property prices. If that’s the hope, then it is equally misplaced, for such taxes plainly haven’t done much good so far.

As for so-called “granny” clauses, allowing the elderly to roll up their liability until death, this hardly solves the problem. The eventual fire sale of baby boomer homes would only further undermine house prices down the line.

The answer to a dysfunctional housing market isn’t a Mansion Tax. It’s meaningful, effective planning reform. As Mr Warner rightly says:

There is only one proper solution to this problem – a sustained increase in supply. The tinkering we’ve seen to date with the planning laws is not going to bring it about.

Back in February 2013, our then Chief Executive Matthew Sinclair wrote for Spectator Coffee House about why a Mansion Tax is such a bad idea. That case is every bit as valid today.

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