As the Guardian has reported:
Plans for a new levy on tens of thousands of second homes have been drawn up by Labour in a move designed to ease the housing crisis and generate funds to cut homelessness.
Second properties used as holiday homes would be the target of an annual tax should Labour win the next election, with each property facing an average levy of about £3,000 a year.
I make clear I am in favour of wealth taxation. That would, of course, include paying tax on second homes. But I have some reservations about this policy.
First, it would be better to up the rate on empty properties first of all. That is a bigger issue and much more widely spread.
Second, we simply need more tax bands in council tax to ensure it is truly progressive. The yield would be much higher there.
Third, this tax is going to be abused and avoided, very easily.
Fourth, genuine holiday lets support many rural communities and do deliver employment directly and indirectly - whilst I also recognise all the social divisions they also create.
Fifth, bizarrely the council tax paid on holiday lets may well be tax deductible by those doing the letting, potentially diminishing the real yield quite significantly.
And last, I have real problems with this:
John Healey, the shadow housing secretary, said the tax was needed to raise funds for a homelessness crisis that “shames us all”.
This is just so wrong it is embarrassing to hear a Labour shadow minister suggest it. To think that we can only tackle social housing from a very poorly targeted and designed hypothecated tax shows that Labour still does not understand that tax does not pay for government spending. Nor does it appear to understand that capital spending on social housing can and should be paid for by borrowing or People's Quantitative Easing,, In addition, to suggest what is in effect a hypothecated tax is always a poor idea because if second homes are such a bad idea making new homes dependent on their continued existence is really not sensible - because when the tax eliminates second homes it could then be argued by opponents that we cannot then have the new homes which we would still undoubtedly need at that time in the future.
I wish Labour could get such things right.
This is a small step in what might be vaguely the right direction, but it could and should have been so much better and as it stands it is far too easy to criticise. This then is not what Labour needs to be proposing right now.
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I also despair. What is it with the LP that it can’t come up with direct government-funded policies that tackle head-on the principal socio-economic issues plaguing the country? It’s not like it’s a problem that’s suddenly emerged (https://labour.org.uk/issues/housing-for-the-many). Is it silo thinking or does John McDonnell simply not understand? (How many times have we asked that question?). Sadly ‘there’s none so deaf as those who will not hear’. Maybe they’re just too scared to go public with what they know to be right. But ‘to know and not to do is not to know’. The big loser is of course the country. It’s actually quite despicable.
(Btw – you’ve been missed. I hope you & the family are as well as can be expected. It’ll take a year.)
Thanks John
Life is ‘interesting’ right now
Where ‘interesting’ means it is more of a juggling act than usual
I suspect that Labour (and all the rest of the major parties) get it.
The problem is that they believe the house budget analogy is the only thing that the voting public will get, so they have to persuade new policies will be balanced in terms of money. And they’re probably right in that thinking.
Economics (of the macro kind) and critical thinking are the major gaps in public mainstream education, if we all understood money and economies and know when we’re getting smoke blown up our asses, then the world would be a very different place.
It’s almost as if the situation we are in is deliberate…..
Richard I have been away from my computer for the past week or so. My condolences for your loss.
Thanks
It is surprising how much simple reflection his death has already required
[…] feel much the same about this plan as I do about the plan to increase council tax on some second homes: it is a good start, […]
As I’ve said before, I would have loved to have seen what was being said during McDonnell’s tour of The City I think last year.
And Baron Jim O’Neill of all people being very positive about him (ex Goldman Sachs)?
I’d hate to think that Labour are going to be timid.
“social housing can and should be paid for by borrowing or People’s Quantitative Easing”
I am surprised that you, as an MMT advocate, suggest borrowing money.
People want to save with the government
That is borrowing money