Reeves plan to tax houses over 500k PART TWO

[soupyspoon]

I am not the OP from the OP!

For those saying cut spending on 'systems that reduce aspiration'

What systems are those? Those that promote and enhance childrens development, lower risk of future poverty. Systems that promote peoples health and get them back into work so they're not off sick? Systems that hous epeople because otherwise they're homeless and destitute?

Those sort of systems?

Our country has been run into the ground on the premises of austerity and 'cutting spending'. Look where it has got us, higher crime, worse health, longer waiting lists, courts/criminal justice systems not functioning, no MH interventions, police cut to the bone, more anti social behaviour, educational falling apart.

But lets cut all that a bit more.

Grrrr, typed a post on Part I only for it to be full

So
What does the UK spend on welfare – and how much will it rise?

"spending on disability benefits is forecast to jump to £56.3 billion by 2029/30, up from £41.4 billion in 2024/25.
Spending on Universal Credit will reach £99.0 billion, up from £87.8 billion."

It's £26bn annual increase in four years time. This is UC and PIP and child benefits, not pensions.

In parallel:

Ed Conway: Something odd is happening in the markets - with no compelling explanation | Money News | Sky News

UK borrowing costs are rising due to external factors, no matter what RR does

Isn't this obvious that it doesn't matter what we do with taxes, we can't sort this country out until welfare system is sorted? it's such a basic that tax receipts fall after certain point of hiking rates, e.g. here
Capital gains tax receipts fall after big cuts in allowances

Yes that is a fair point.

Im actually quite shocked at those figures and I am a bit supporter and believer in the welfare system.

The biggest expenditure for the DWP is pensions and related benefits.

There was never austerity.

Government spending went up every year, except one.

Tell that to LGs who have had their spending slashed yet have to meet increasing need, much of it statutory. Spending might have gone up, but it didnt meet the increase in need. Thats austerity

Pensions are 49% of welfare budget. UK state pensions are one of the lowest in developed countries already. Triple lock can be reviewed, but this doesn't change a thing about benefits.

I work in conveyancing. I have not read the last thread.

The housing market is an excellent way to boost the overall economy.

If we scrap stamp duty for a while the buying and selling of houses booms. Retail and trade also increases as people take those £thousands saved and get the kicthen done or buy things for their new house. I get thats just a cohort of people who are moving right then at that stamp duty break. But in my opinion if this tax on selling a house over 500k I would think twice about moving again anytime soon.

My own circumstance I bought a house last year 520k. Potentially could have one more big move in me. Im 35 good job stable home etc. 10 years could possibly sell and buy a house at 700k but now I won't bother. I'll stay put until I NEED to downsize. This means me and people like me are not contributing to the economy by moving house.

However we dont really know the ins and outs of the proposal just yet... but as it stands I think there is other ways to boost spending and gather more tax in than this

Why there is so much increased need then?
Covid spike was clear, but it's 44% increase in 5 years time. It's only 5 years!
To continue like this we need to increase tax take 44% every 5 years? how would this work?

We have had services cut which were preventative, just one example was shutting support services for parents, Sure start and the like.
Public transport has been cut, so this limites mobility and job seeking and that has a knock on effect on social problems
There may be an argument about covid causing longer term health problems, Im not sure on that one but lots of people would say that
We had Brexit, sorry to say, I know people got uppity about this being mentioned on the other thread but year on year this has had a massive impact
Less social housing year on year, meaning more homelessness and poverty, raising social needs and social problems.
Higher expectation from the public about provision, aging population, now that fags and booze dont kill people off people live longer, dont pay the duty on those items anymore but need health care and social care

The list is endless, these are just some examples

Think about it - in 10-15 years time your mortgage on this house will be paid off.

By that time you're mid forties used to your lifestyle and then you have extra money you paid monthly - will you be tempted to go part time to enjoy your life a bit more? or will you continue working as now?

I can’t see how this will work for the elderly, my relative lives off state pension and attendance allowance only, she has a 2 bed house which is only 2 or 3 council tax bands below someone living in a castle (or a 7 bed on 2 acres) I’ve checked to see if she is in the right band and yes she squeezed into the one she is in by £125. No one in the family is interested in paying this tax for her (no one can afford it frankly) if she needs to go into care they’re taking the house, she looked at moving but she swaps her own 2 bed for a small 1 bed flat, no garden further out of town (recently given up driving so that won’t work)
Seriously what is she supposed to do? And yes she worked all her life!

@soupyspoon

I hear you and completely agree about Brexit.
But in the last 5 years UK population has grown about 4%?
Means per capita government spend increased 38% ?

These are huge and completely unsustainable numbers.

The welfare system and the NHS have grown exponentially to cover areas that they were never intended to address. Any attempt at reducing the present scope of either, will be perceived as "cuts".
If I were to play benevolent despot I would look at increasing personal tax allowance to GBP24k for everyone. Those on benefits would get the 24k tax free and nothing else. I would also ensure that married couples (blanket term to include those in civil partnerships), where one half was not working, would get the full 48k tax free sum.
I would then tax all earnings above the 24k at 20% blanket rate across the board. No increments or complicated structures.
I would reduce NI contributions to a rate that covered a minimum state pension on retirement, the age for which would have to reduce anyway once all the boomers have died off, so let's set an arbitrary age of 63 for both women and men. I would encourage private pension provision.
NI contributions would also cover the original minimum NHS provisions for health and dentistry. I would set up an additional insurance-based scheme to cover health and dental care over and above the minimum provisions, which would probably have to be compulsory and based on something like mortality tables in the first instance.
I would also renationalise water and power services as well as transport and impose a maximum cost per unit, according to how the utility is provided.
At the same time I would impose a review on rented accommodation and set maximum rents per area, according to the size and condition of the properties. Landlords would be licensed and could only increase the rent on their properties if they upgraded to the next level of required property standards.
Not sure of the current regulations for new-build housing in the UK, but I would apply minimum insulation and heat source standards as well as things like triple-glazed windows.
I would try to de-politicise the education system and reduce the sizes of schools/classes according to the birth rate, which must be known and therefore its data used for planning and provision.
I would also organise schools, so that classes were according to ability for most subjects with dedicated SEN classes per year.
Core subjects would be the usual suspects of English and Maths together with Geography, History, Chemistry, Physics and Biology as well as 1 foreign language. In addition, Food and Nutrition would be compulsory for everyone and Sport would be included in the curriculum on 4 out of 5 days per week.
I would reduce the number of universities and the number of students, but would make higher/further education free for those whom it would benefit.
I would also re-introduce national ID cards (I have one for the country I live in). People may well be horrified, but they are jolly useful, particularly if you need official photo ID. You could also use the data (anonymised, of course) for planning purposes. ID cards would be compulsory for everyone living or intending to live in the country.
As for multi-national corporations, they would all be required to be taxed on the revenue generated in the UK, no creative accounting or off-shoring, with a minimum turnover/tax expectation.
I'd better stop now before I get too draconian!

Unfortunately no it won't I have a 30 year mortgage which started at 34...and I dont overpay as it stands as have high childcare costs, which will be ongoing for foreseeable as my kids need wraparound care... so in 10 to 15 years time I'll still be working very full time as I do now. And I would happily upsize again. Take on more mortgage and have a bigger/better house and then sell when I want to downsize and enjoy retirement. However now instead of that next move I would just stay put, and instead of putting money into a bigger mortgage when I do have more disposable income ill be putting into my SIPP or ISA and not giving the government tax on my house sale or stamp duty or putting that money into the economy via retail for the new house. But that's just me!

Yes I would vote for you.

This means me and people like me are not contributing to the economy by moving house

But if you don't move you will probably contribute by having home improvements done like new bathroom/kitchen/windows etc.

Although if people want an extension, I'd prefer they moved to a more suitable house rather than inflicting months of noisy building work on their neighbours ;)

I would do the following:

• Borrow to build masses of flats in areas with concentration of employment. IKEA style flats of reasonable quality suitable for a family (so decent insulation, size etc) and at no profit. Not via housebuilders but state (Planning permissions don't matter given profits to be made). Because it's a capital project markets wouldn't be freaked out. Anyone could rent such flat at a very reduced rate but on condition of not owning any other property. Obv no subletting. So people can move where jobs are and raise families and NMW is sufficient to have a reasonable quality of life.
• I'd increase personal allowance from 12.5k to something more, e.g. 18-20k, need to work on numbers
• I'd reform PIP so it's not based on how I feel it impacts me but based on formal diagnosis supported by objective medical tests. And no, ADHD doesn't qualify, medication is available. Those with perm disabilities don't need reviews ever
• I'd reform UC to make all benefits time limited and linked to previous earnings up to a certain cap.
• I'd remove all cliff edge taxation
• I'd work on change of culture to celebrate success and admire high achievers

A lot of sense in what you say but practicalities. No increase in benefits for more children? You would decrease the pension age despite everyone living longer?
I’ve long thought new builds should be more ‘eco’

Plus there’s already talk of raising the state pension age to 70

Not sure of the current regulations for new-build housing in the UK, but I would apply minimum insulation and heat source standards as well as things like triple-glazed windows.

This needs to go much further than just new build housing. I would like to see compulsory measures that must be made to meet minimum standards before a property can be sold. Far too many excuses being made by people living in awful old houses.

I dont know if you were aiming that at me but I know Spain pensioned off a lot of its public sector workers to make way for young people, so people in Spain at one point many years ago started a very long retirement with good government pensions to compensate. Im not sure how that went, whether that was a good move or not.

It would be really helpful if people understood pensions and how they compare to other country’s pension systems better.

We have a state pension that is low. But we also have occupational pension system where the government gives excellent tax breaks to employers and employees to invest. In other countries occupational pensions are combined into the state pension system. Employers and employees pile money into the state system. There is no separate state backed system.

People don’t understand this and compare the state pension here with the state pension overseas, not understanding that they are comparing apples and pears. A fairer comparison would be to compare your state AND occupational pension with overseas state pensions.

UK state pensions are low because we pay little into it.

Well no one would ever sell then!

And not everyone wants that in a house, I dont. I like a breeze coming through the house I like fresh air. I dont want small windows either and I dont want the look of my house compromised.

@PaddlingSwan

A lot of points which should be done, but where is your source of funding?
Did I understand you correctly that tax free allowance would be equal to benefits? what is incentive to work.

Dramatic reduction of personal taxes would spike demand - how will you control inflation? do you believe that corporation taxes will compensate for lost personal taxes? look at this pie:
Where does the government get its money? | Institute for Fiscal Studies