A new Doomsday Book?

 Hi All,

With the Conservatives pretty much finished at the next election- it is a matter of how badly we loose- I think people must look at the opposition and see what horrors will be inflicted on us. 

 Labour are not much better.  They haven't as a party really changed since Corbyn, but the change is enough for respectable opinion. I initally thought that they would be constrained by the current crisis,  as while they like  to spend billions, they've got to be honest about the massive tax rises they are going to heap upon us just to 1) negate the cuts that are going to happen in the next two years and 2) to spend even more billions in their plans for the NHS etc. 

However rather than be honest with the public about the honest need if you want the dream of trying to fuel the NHS with cash, to raise income tax etc,  I can now see Labour turning this into the 'rich verses everyone else'. Alas the really super rich have good accountants and lawyers and will always find loop holes in such a complex tax system as ours .As ever it is the middle classes that will suffer.  Of course Jeremy Hunt will have taken all the low hanging fruit such as the stealth taxes or maybe even the triple lock of pensioners,  so one thinks Labour will go for broke and introduce a wealth tax, one of the left's dreams, I doubt this will be in the manifesto, but it will be the ultimate and probably greatest tax grab in history. 

A wealth or asset tax is a tax an things you own, rather than the income derived from it. In theory everything  physical is an asset, but there is little value in taxing a toaster, but more value in asset taxing gold bars (or even your gold/diamond wedding rings!).  In all likelyhood the easiest thing an asset tax could be applied to is property, but it could be extended to your savings, motor vehicles, or anything of actual physical value such as pet dogs and cats . 

In fact the Doomsday book of the 11th Century was written for that very reason- to asset the value of property for the new Norman rulers. You can imagine the amount of money that this will create for the government: the total UK property market in 2020 was calculated to be £7.5 trillion, whereas GDP was £2.4 trillion. If an asset tax was introduced on UK property  at 1%, this would raise £75 billion and at 10%, a massive  £750 billion, which would cover a huge portion of UK government expenditure. 

This would clearly have the left salivating at the thought of getting their hands on such a pile of cash. 

The trouble is that property is an illiquid asset and like most assets is subject to supply and demand. Furthermore the people owning property might be asset rich, but income poor. It is doubtful that a middle class family owning a £300,000 end of terrace will be able to stump up £3,000 or £30,000 at the blink of an eye, given all the other expenditures a household has to make, such as being able to afford what by that time would be an extremly expensive interest rate on the mortgage, even if so many millions are now renting and don't own their own home, then it is clear that landlords will simply pass on the cost of this tax to their tenants or if not they would probably be forced to sell the property. If enough do so at once it will of course make house prices and therefore the asset go down in value. 

But don't tell the left as they are going to turn this into all their envy and class war that they can think of to soak the rich, forgetting that there is a difference between being rich on paper and being rich in reality.