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Liberal Democrats to Tax the Rich Out of Britain with 0.5% Property Tax

Politics / UK Politics Sep 21, 2009 - 11:00 AM

One of the great things about being the third small party is that there is literally ZERO chance of becoming the next government, hence the party can announce ridiculous policies that pander to the masses but make little if any economic sense.

The latest 'big idea' is to levy an extra 0.5% annual council tax on properties over £1 million i.e. a £2 million property would cost an extra £5000 a year in council tax. This new Lib Dem policy completely fails to understand the basic fundamental difference between taxing income and taxing existing capital assets, therefore this tax will actually penalise pensioners on relatively modest incomes that live in houses over £1 million and therefore forcing them to sell and move to sub £1 million accommodation.

Vince Cable mansions the £30 million pound mansions of billionaires Mittal and Abramovich, which would generate tax council tax revenue of £145,000 each. Compare that to capital investments of several billions that employ many thousands that generate income tax. Therefore is it really worth sending a message to the rich that you are going to be singaled out for punative taxation that have the option of taking their billions and the thousands of jobs to much more favourable tax regimes such as the United States?

This, along with other such like policies repeats the Labour Parties mistakes of the 1970's that resulted in a Brain drain out of Britain that was only reversed when the Conservatives came to power.

However, as I have already said, there is NO CHANCE of the Lib Dems gaining power, hence they can continue to announce crackpot policies that do not stand up to proper analysis of the costs and benefits to the country.

UK Election Forecast

My earlier in depth analysis of the UK economy concluded that a debt fuelled bounce in the economy is underway that will to large extent prevent a total wipeout of Labour MP's at the next election as long as it was delayed until May 2010 Election, which projected a Labour parliamentary party on 225 seats, Conservatives on 343, which is significantly less than the landslide of 414 seats being bandied about in the Tory press at the time (The Sun). The Lib Dems trail far behind on a projected number in the region of 40 seats.

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 300 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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