Sunday, July 19, 2009

[good plan] needs to take account of the current agenda

Got you where we want you, sheeple


Mark Wadsworth is really gunning for it on his blog just now. We're up to N19 of his reasons why arguments against LVT won't wash. Along the way, he's written a number of things which stick in the mind.

Here is something he quoted:

The State seemingly doesn't want people at the job centre to get jobs (or it would be making them do a lot more), and even if they are offered a job, unless they are offered a good wage (average in the UK is about £25,000)* there is little incentive to take it.

If I decide to move into a flat on housing benefit, I will have a large incentive not to take a job unless it comes with a good [wage]. So, no bar jobs, no part time waiter work, etc. It just doesn't pay. The same goes for the other 2.38 million people.

I understand it's not exactly Mark I'm addressing here.

"The State seemingly doesn't want ..."

It certainly does seem that way. They know very well that as more and more become redundant [the actually employable], then there is an increasingly vast pool of able people available for the shrinking number of slots. And as market forces apply here, the tick boxes multiply to ridiculous proportions [I have seen this in two cases already and am sure it is countrywide]; they ask you to second, third and even fourth interviews, they um and ah and generally f--- you about.

Employers are, in reality, saying, on the one hand, that you must be a specialist. No, they say to your face, we want someone flexible. Bullsh, I retort - you need an NVQ for going to the toilet these days and the only people who are prepared to fork out for one of these NVQs is someone who has decided to be in that particular field. So, having demanded this waste of time and money, the employer then turns around, in an effort to differentiate between candidates and starts demanding all this side-experience and these other side-qualifications.

Experience in an area of work used to be a valuable asset, even more valuable when one is experienced in many different aspects of that area of work. Now, you can only be of value if you've got the latest Brownite bit of expensive paper which has zilch to do with whether you can do the job or not.

One thing the person Mark quoted did write, which is true, is that there's no point taking bar jobs or NMW part time work because there are things called mortgages, other repayments, gas, electricity, phone, council tax, water and insurance to pay. I estimated that I need £350 a week, just to cover expenses and pay for food.

Mark has this solution:

As background, I have long said, as a first step in the right direction, we could replace all existing taxes on residential properties (Council Tax, Stamp Duty Land Tax, Inheritance Tax, TV licence fee, Insurance Premium Tax etc) with a fiscally neutral flat tax on land/property at current market values, which would be about 1% per annum, i.e. on an average property worth £150,000, the annual tax would be £1,500, which is much the same as current council tax plus TV licence fee.

Any such system of taxation would have to work on the basis of averaged-out market values based on actual selling prices of properties in each area (i.e. postcode sector or local council ward etc). Sure, it's a bit rough and ready, but better to be roughly right than precisely wrong, say I.

On water supply, he says:

JH, thanks. But there's no such thing as "water rates" any more, you pay them to the water company. OK, if you're not on a meter, you pay a flat fee of [a made up figure] x [a made up percentage], but as a free marketeer, I approve of water meters (despite my family would probably end up paying more) and also believe that the government should charge water companies for their monopoly right to deliver water (the price to be decided by auction), but those are different topics.

Right, so let's take this further.

Lord T has a notion that planning permission will be removed from the local authority if enough people cause a huge problem. We discussed it and it might happen this way:

A young man is on £18 000 p.a. On that basis, he can only qualify for a mortgage of, say, £60 0000, based on his monthly gross against repayments. Let's say he and his girl plan to marry. She's on £14 000 and so they end up able to afford a £110 000 home. But the income/house price gap has artificially inflated to the point where they no longer can buy even a base home.

So, with the £7 000 or £8 000 they've managed to sock away, and the £20 grand the parents can supply, they almost manage the price but not all the other bits and pieces as well. You might ask where I'm getting these figures from. OK, I'm having a stab at them.

The bottom line is that new homes are not affordable, even in the recession.

What do the young people do? They do as they used to do in Russia - they live at home at one set of parents'. This is not good and if enough young couples across the country are in this position, the parents are also p---ed off by it and third world things are going to begin, once again as in Russia. Shacks start springing up in unzoned areas, holiday homes are used, old caravans are bought, campsites are utilized and lies are told.

In an atmosphere where, as Julia M points out, this is happening, the council prosecutes by the salami principle but it gets into the local rag and then everyone starts doing it. Don't forget the retiring boomers going on the dole and those who don't even qualify for it now finding themselves on the street - no dole, no pension [Gordon stole even the little bit they'd saved], no job prospects - a new underclass.

There'd be mayhem and hopefully the stranglehold would break but not before many tears at bedtime. Now Mark's ideas in a perfect world are fine and he makes a good case but he makes it as a fully-employed accountant and not as someone about to find himself on the street.

Economics cannot be fashioned in a vacuum. I think he's right in principle and furthermore, I'd like to see government reduced to almost negligible proportions but the simple truth is that we are observing an agenda which, as the person quoted above said, shows the government are not really interested in people being employed - they want little piglets at the mother pig's teats.

So, in order to achieve the goals we know we should achieve, we have some breaking down to do first. Meanwhile, a lot of people are going to be starving on the streets with these sudden knee-jerk swingeing cuts, as we move form one scenario to the otehr. And don't forget that if Irish Lisbon 2 is passed on October 10th, the socialist agenda will rule.

I'd like to ask Mark how, in this scenario, the tax plans I fully agree with him about can actually be brought into practice.
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4 comments:

  1. The average income may be £25K, I suspect that considerably more people earn less than that than earn more. Why are median earnings never quoted?

    On another point - I agree regarding the 'people starving in the streets' point. Its the problem I return to with any of the proposed radical changes in the structures of tax/welfare, many of which I agree with in principle. The populace at large has become accustomed to the idea that you can ALWAYS get money and shelter provided gratis by the State, whatever you do, however badly you behave. If you change that concept, and draw a line somewhere in the sand, and say 'Step beyond this line of acceptable behaviour, and we (the State) will no longer provide for you' you must logically accept that there WILL BE people who go over the line, and will very possibly end up starving on the street in significant numbers.

    I think this would be the downfall of any proposal to reduce/restructure welfare as the public will demand that such people are provided for, thereby making the new structure the same as the old.

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  2. All the elements in the equation need to be covered - that's the bottom line.

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  3. JH, I am a simplification campaigner. All of the following measures are broadly revenue-neutral to within a tolerable margin of error:

    1. Let's boil the tax system down to a single flat rate of tax, call it 31% (i.e. current basic rate plus employee's NIC).

    2. Scrap higher rate tax (obviously) but as a quid pro quo get rid of regressive tax breaks (in particular tax breaks for pension saving).

    2. Corporation tax also 31% (which is a bit higher than now, but scrap Employer's NIC as a quid pro quo).

    3. Let's replace all 'poverty alleviation' measures (i.e. welfare system, tax credits plus tax free personal allowance) with a Citizen's Income (call it £60 a week for adults, half that for kids, twice that for pensioners, i.e. £120, roughly the same as Pensions Credit level).

    4. Let's roll all taxes on property/wealth (Council Tax, Stamp Duty Land Tax, TV licence fee, Inheritance Tax, capital gains tax, insurance premium tax plus bits and pieces) into a flat rate tax of 1% per annum on property values.

    With no income-based means testing, people are more willing to take short term or part time or low paid jobs.

    With no Employer's NIC, employers are more likely to employ people.

    House price rises will no longer be a one-way bet - if your house price goes up, the tax goes up so people who over-occupy are more likely to agree to more housing being built in their area, or more likely, to trade down into smaller properties.

    Land Value Tax is the stick of course, the carrot would be (in a perfect world) we would accept that 0.1% of undeveloped land in England is used for housing each year, i.e. enough for 300,000 new homes, so that broadly speaking, at the margin, every young married couple can afford a home, which shouldn't cost more than £500 for the land plus £75,000 to build it.

    More to the point, people have to learn that housing wealth should not stand on a pedestal above other wealth. If a pensioner has £150,000 cash in the bank, you would reasonably expect him to spend it during his retirement if he wants a lifestyle above and beyond the bare minimum.

    Similarly, if a pensioner has a house worth £150,000, they would morally be expected to draw on it during retirement, to pay the LVT of £1,500 if nothing else.

    And so on.

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  4. Thanks, Mark but you do understand that I'm going to be at you with questions on aspects of what you've been posting for some time, don't you? :)

    I want to get ideas crystallized in my own head on this thing.

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