Land Value Taxation Campaign

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Northern Rock crash anniversary

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The anniversary of the Northern Rock crash is just coming up. A Daily Telegraph article analyses the events leading up to it. If money is fed into the land market, for this is what happened, the price will inevitably bubble up. And no regulation will stop it, short of a tax reform which introduces the right form of land value taxation. How long will it take for this to be understood?
 

Property stocks fall as land values dip

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A report in today's Times reports that property stocks have fallen as land values dip. You can read the article here There is an important lesson here for advocates of land value taxation.
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Britain's unfolding economic disaster

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It becomes increasingly difficult to keep track of all the ramifications of Britain's unfolding economic disaster.
Reposessions rise by 40%
Northern Rock hits taxpayer for £3bn as losses mount

None of this would have happened if the Labour government had introduced LVT at some time within the first five years of its coming to power. The Campaign was amongst those urging this on Labour's policy making think tanks in the early 1990s  but the clever young people who worked for these bodies did not even bother to acknowledge receipt of the Campaign's submissions. Now everyone is having to pay for this wilful ignorance.

There are also rumours that Stamp Duty Land Tax will be deferred or suspended.
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Bank of England ignored alarm bells

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Tim Congdon was a member of the Treasury Panel of Independent Forecasters (the so-called wise men) which advised the last Conservative government between 1992 and 1997. He writes

"In evidence to the House of Commons in February last year I warned that by the spring of 2008 the Bank of England would be “in quite serious trouble... Why was I so worried in early 2007? And what had the Bank of England got wrong “since mid-2004”? The answer is that from mid-2004 to early 2007 the Bank of England had allowed too rapid growth of the quantity of money. In the balanced and stable Nice years — that is, the decade to 2004 — the growth rate of the M4 money measure averaged slightly more than 7.5% a year. But in the three years from mid-2004 this figure jumped to over 12%."
Read the full Sunday Times article

It is easy to be wise after the event. A tightening of the money supply in 2004  - for example, by raising taxes and interest rates - would have hit the economy outside the prosperous parts of Britain, mostly in London and the South East.
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Property cycles - an investor's view

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Fred Harrison's Boom-Bust theories are being used by some investors who still think they can get rich quick by playing the cycle. There is an irony here. Follow the "Read More" link to watch these videos by an investor who is upset at having sold too soon to maximise his profits and missed out on the last years of the boom. The videos give a clear exposition of the theories. On a broad view, these kind of "investment activity" is completely unproductive since it adds nothing to wealth. If the wider interests of all were to be taken into consideration, a government would be making firm moves to get LVT on the statute books, to kick the economy out of recession and prevent a repeat performance around 2028.
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Trade talks fail

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Responding to news of the collapse of the latest round of talks on free trade, European Trade Commissioner Peter Mandelson said: “We have missed the chance to seal the first global pact of a reshaped world order. We would all have been winners from a Doha deal. Without one, we all lose.”

But why does there have to be a "deal" at all? The discussions that have been going on are like an argument between two people, where one offers to stop kicking himself in the teeth if the other will agree to stop shooting himself in the foot. If either party refrains from the self-harm then they will be better off, regardless of what the other does.
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Treasury plan to rescue mortgage lenders

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The Treasury is preparing a radical rescue plan for the housing market which may involve pumping billions of pounds into the stricken mortgage markets. Alistair Darling, the Chancellor, has asked his leading advisers to investigate a plan to provide government support for lenders until the financial crisis has abated.

The proposal is being investigated ahead of the completion of Sir James Crosby's report into the funding struggles faced by UK banks. Crosby is expected to warn that banks are facing a massive "funding gap" caused by the collapse of the securitisation markets which previously provided around 40 per cent of backing for home loans. Experts think the gap to be filled by the Treasury could amount to £40bn-£50bn a year... Although he will not provide cast-iron recommendations until his final report in October, he is expected to warn the Government that some form of intervention is necessary to lessen the eventual economic pain. In advance of his recommendations,

Treasury officials have been working hard to formulate a rescue plan; the Government would offer to swap new mortgage debt with banks for gilt-edged government securities. The scheme is very similar to the Bank of England's Special Liquidity Scheme in which the Bank swaps treasury bills for old mortgage debt, except in this case the scheme would cover new mortgages issued this year In reality, the scheme would be designed to support the wider housing market and economy...
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UK tax credit scheme in trouble

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The latest tax problem to hit the UK goverment is the tax credit scheme. Apparently about £2.8 billion was overpaid and the authorities asked for their money back. But people challenged this, using the Freedom of Information legislation to obtain evidence that the Inland Revenue had been incompetent when they made the overpayments. Most of the losses will now have to be written off.

How long will it take the government to realise that the whole tax system is broken?

 


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