When even the EU says we\’re too highly taxed….

It also concluded that property taxes were the highest in the EU.

Well, that\’s true. The UK gets a larger chunk of its tax revenue from property than any other OECD country in fact. Twice the average. So we can\’t say that property is undertaxed…..

On the cost of flying, it adds: “Aviation is taxed more than in any other member state via air passenger duty.”

Indeed, APD is well above the Stern Review numbers for emissions and really ought to be reduced.

Other problems which are hitting economic growth are identified as the high costs of childcare and the poor skills of many workers.

Childcare is the fault of the last lot. Trying to wipe out the informal sector through regulation has led to costs spiralling. And skills and education? 93% of the people are educated by the State.

Even Adam Smith thought that there was an argument in favour of at least some State involvement here: being in a country that is universally literate is a public good. The problem being of course that the current system doesn\’t actually provide universal literacy….

15 thoughts on “When even the EU says we\’re too highly taxed….”

  1. I can understand the arguments for the NHS (single buyer, need to cover GPs and other forms of care) – I can also see the possibilities of social insurance for healthcare ( a la France). I can understand why the US system is mad.

    What escapes me is the logic of a national educational system. Vouchers and free supply with minimum standards (eg can read and write at 11 and do basic maths) strikes me as being logical. Quite frankly the existing system only seems to be there for the benefit of bureaucrats and teachers. There is the argument about bad schools for those left behind, but looking at the system today the big conclusion is that it isnt working. Rather than abolishing private schools, let’s abolish the state system. No more education ministry or LEAs. Alliances for sports amongst some schools, and for minor subjects. A minimal inspection system and mandatory publication of results.

  2. “The UK gets a larger chunk of its tax revenue from property than any other OECD country in fact. Twice the average. So we can’t say that property is undertaxed…..”
    How much of that is stamp duty and how much is council tax? Stamp duty IMHO is very unfair it is a tax on people moving. A friend of mine is having to move for work – why should he be taxed for doing this?

  3. Property cannot be considered undertaxed while it is still inflating in value (in some areas/such taxes should be regional).The world has destroyed the capitalist system by supplying cheap credit (for production/consumption) and letting it to pour into real estate instead (Japan,Spain Ireland US UK ,the list goes on).
    The solution is to supply cheap credit for production and consumption and block it leaking into property with a land value tax that is triggered as soon as prices start to rise (so not clawing back past gains),
    This is so fucking obvious that it is literally unbelievable that it was n’t put into operation years ago.
    Also you are ignoring the criticism of high rail fares in this article.All the benefits of private sector expertise, private capital and competition,and still the fares and state subsidies go up! How can this be? Quick blame the workers and fix me another drink! Then send for Green or Beecroft .

  4. We’ve discussed this before. Property is only highly taxed if you count council tax as a property tax.

    It isn’t a property tax as is commonly understood.

  5. With David.

    People in the UK move a lot more than in many other countries, and when they move they often buy and sell as well. There’s no concept of a “property ladder” here – if you buy you buy for life. Or for at least 15-20 years. No German would even consider undertaking more than one property transaction in a lifetime because the transaction costs are around 10%.

    And who let the LVT guys out of the box?

  6. @J5
    Adam Smith, the intellectual patron of this blog , is probably this country’s most pre-eminent Land Value Taxer.The from-here-on -upwards- only version was proposed by JS Mill in 1845 .
    It is not land taxers who are eccentric but the Night of the Living Dead zombies who believe that land value inflation is a good thing or “a fact of nature”or just one of those things.God they’re thick.

  7. It seems to me that the UK experiences the worst of all worlds; highly taxed, but with the money spent inefficiently – which in turn increases resistance to paying tax and thereby increases the costs of collecting it, and also increases resistance to some of the ways in which it is spent (NIMBYism and unions), making any government spending more expensive than it needs to be.

    By contrast, it seems the optimal solutions are taxes so low that no-one really cares much if they’re spent a bit inefficiently at times, or highish taxes that are spent effectively so nearly everyone cheerfully pays them in the firm belief they’re getting good value for money.

  8. Land value inflation is not a good thing in its own right and for its own sake, but it does just happen. Indeed, with an increasing population it is as close to a foregone conclusion as we can get in the dismal science.

    The LVT is about as anti-market an intervention as one can imagine. It transfers all the value (whether created by the owner or by his serendipetous choice of environment) to the collective. Land ownership becomes a nonsense. In rising areas, instead of having property prices rising beyond the reach of all but the bankers, you will have the taxes rising – still only the bankers will be able to move in and pay the increased taxes, but you will additionally force out people who have been there longer and cannot pay the new tax.

    If you acknowledge that personal ownership of land is a fine thing to do, the worst thing you can do is to apply an LVT that will end up forcing people out of their homes because the land under their feet happens to have gone up in value without their permission. And we know governments will be far snappier about assessing value increases than decreases.

    A further fact is, unless you want a massive bureaucracy of actuaries calculating land values constantly, with the potential for huge legal disputes, you can only determine the value of land when it is sold between parties pursuing mutually-exclusive interests. In most places that does not happen very often.

  9. @J5
    You go on rather alarmingly about a form of LVT I have not proposed.
    It is fairly clear that I was supporting the JS Mill proposal for a tax on future land price inflation only.So thenceforward people will not shove investment into land as a hedge against inflation: land values would be frozen,while cheap credit would be poured liberally over the rest of the economy.This form of LVT is virtually a land value inflation tax, a necessary precaution when attempting to stimulate the economy by monetary means otherwise we get the Ricardo effect where all prosperity ends up benefiting landowners,(which he would deal with by land value tax in his funny old way.We know so much better now! Look how well we’re doing having
    junked the ideas of Economics’ Founding Fathers.)

  10. It’s the wanting to freeze land values that is the problem. The value of land changes and the world is less efficient if we go all Canute about that.

  11. Tim: being in a country that is universally literate is a public good.

    I’m not sure I understand that. I was under the impression that, education being excludable and rivalrous, it is a private good, albeit with positive externalities. I don’t see how universal literacy can be a public good at all, unless you merely meant a thing that is good for the public.

    Education itself is indeed excludable and rivalrous. So education itself is not a public good. Smith’s argument (not that public good was so rigorously defined then) is that while that is so the general literacy of the population is a public good. You get literary society, newspapers, general information flow, informed public debate.

    It’s that while education ain’t the effect of education is a public good.

    At the other end of the scale the research done in universities is a public good. Even if the education component of them is not.

  12. Ja5
    Wage inflation is a fact of life as natural as the rising tide but very severe measures were taken to control it, amounting in my lifetime to virtually a class war on the organised working class.Pay feezes were the least of it.Pay freezes are in place now of course and all the ruling-class prats are shitting themselves that there’s no effective demand to prompt the private sector revival which they’ve bet everything on.

    If people were offered the deal:you get stimulus
    jobs and ready money with the proviso that, if the house/land price inflation that ruined Spain,USA,Ireland ,Japan sets in, you have to pay a small land tax ,then people would go for it.

    The idea that its natural that badly built London terraced houses are worth £1million as with Will Self’s recently is absurd.This figure is an artificial construct of tax manipulation

  13. This Land Value Tax is an amorphous beastie. If you’d care to point us to a coherent description of the version you favour I’d be happy to give it due consideration.

  14. Mark Wadsworth seems to talk a lot of sense on LVT. Could be worth heading to his blog for all things LVT related.

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