Tuesday, 2 October 2012

Soak the Rich

What? Has Idle turned pinko? Has he chucked the towel in on his Friedmanite beliefs? Did Laffer plot the curve upon his graph in vain?

Worry not, idle reader. I don't mean US, I mean THEM. There's local, home-grown rich; and then there's international, Johnny Foreigner rich. And it's Johnny I'm after.

Torygraph blog today:

"Nearly six in 10 overseas millionaires named residential property in London as their favourite asset class, according to Bill Siegle, a senior partner at international estate agents Cluttons. He said: “Quite remarkably, 43pc of these highly mobile investors state that the global financial crisis has had no impact on their view of London as a top investment target location. In fact, almost a third – or 29pc – goes on to claim that London is better-placed because of the Eurozone difficulties.

The fundamentals of the London economy remain strong; the city attracts dynamic businesses and skilled professionals from around the globe. This gravity effect underpins the city’s appeal to wealthy individuals looking for investment opportunities in the next 12 months.”

Well, we know what effect this has had on London property prices, and it has been vertiginous. Most importantly, it prices Londoners out of their own market. It makes no earthly sense to allow the international market unfettered access to our real estate if it is detrimental to one's own citizens.

So I say: TAX THEM TIL THEIR EYES WATER. And then tax them some more. If they are happy to pay 20% stamp duty to buy in London (and by THEY, I mean those who are not tax resident in this country), plus a 5% annual surcharge on top of their council tax, then one could review it and push it up to 30% and 7.5%. Etc, etc. My theory is that the Exchequer will receive a HUGE increase in tax take, whilst reducing the number of new foreign buyers. And if, one day, not only the Idle Tax, but political governance and property rights in their own godforsaken countries improving to a level that stops them from 'investing' in our capital - well, that'll be a jolly good day for London and the World, won't it?

I am a markets man, but I believe in intervention when it cures an obvious anomaly. This seems to me to be such an opportunity, and I can't for the life of me see any downside.


Elby the Beserk said...

But what about the Scots after they go independent? :-)

idle said...

No chance, Elby. Salmond's support may be a mile wide when it comes to elections in the current constitutional arrangement, but will prove to be less than 1mm deep when it comes to the independence vote.

They are sucking long and deep on English tax revenues, and do not want the teat to be snatched from their gums.

Thud said...

I like my free markets to be free.

Scrobs... said...

Forget applying Stamp Duty, there is a huge time bomb being enacted right now, with the imposition of the Community Infrastructure Levy.

That really will create ghettos for the ultra rich...

Weekend Yachtsman said...

Scrobs, you're correct. I suspect this is a result of lobbying by the big building firms, intended to shut down the burgeoning self-build sector - which it certainly will do.

It's getting no publicity, for some reason.

Scrobs... said...

It's a council's hidden weapon to restrict any development they don't seem to want, Mr Yachtsman.

Sevenoaks, for example, are asking six figure sums on some planning applications, which makes the new house quite a bit more expensive...

Bristol wants £70.00 per square metre of building on hotels, so that adds over £200,000 to a new development, which may just make it unworkable in this current climate.

Wandsworth are asking for a staggering £575 per sq.m, so this means an average new house of - say - 120 sq.m. has an extra of £70,000 to cough up!

Luckily, there is so much disarray in most council's understanding of the implications, (they are only simple politicians, after all), that there will be a delay in the imposition, but as you say, once the publicity starts to roll, then expect howls of anguish from many quarters, including, I suspect, the builders you mention, but you're probably right in their complicity as well.

Anonymous said...

But who will the govt sell their property assets to and rent it back from? I think you'll find the govt will not want to diss the landlord.

said Pip

Electro-Kevin said...

I've long advocated a tax on employers hiring unskilled foreign labour for the same reasons.

Immigration isn't, in fact, a cheap way of getting things done when the taxpayer's subsidies are brought into the reckonning.

This is anything but a 'free market' when we have a welfare system behind the whole charade.

Here we are at crisis point with Mr Osborne attempting to shave £10bn off the welfare bill.

Too right he has. I'm all for it.

But it can't be a one way street. The unskillled jobs in this land simply have to be freed up for the British citizen so that there can be a real differential between the incomes of the unemployed and the low paid.

This needs to be done as well as freeing up the housing.

Elby the Beserk said...


Indeed. Very funny to watch the reaction of the Left to the figures on how much funding the Scots require. Foot-stamping time :-)

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