Skip to main content

The Low Tax Problem of a Global City

A few weeks ago, Michael Goldfarb published an article in the New York Times highlighting the growing crisis in London property. His view- that Prime London property has become a global currency- has been said before, and rightly. However the timing of his article hit the zeitgeist of growing anxiety about the mismatch between London as a place to live, the capital of the United Kingdom, and London as a playground of the globalized rich. 

The squeeze in London is having a strongly negative effect on large areas of British Society, and the influx of hot money from places such as China, Russia and the Arab World- not to mention crisis-hit EU member states is not just undermining the social fabric of London but the economic fabric of the UK.

At the Liberal Democrat conference in Glasgow, several London based members made the point that these apartments now owned by the global uber-rich are often left empty, so at night you see few lights on in Mayfair and Belgravia- and the impact on the city is a kind of hollowing out.

The fact is that the taxes which are payable on Prime London property are so low as to represent a gigantic enticement to the emerging investor class of China to fill their boots in London, at the expense of the cohesion of the the city and the lifestyle of the British people.

It seems to me self-evident that the cost of this influx of investment has created social problems way in excess of the benefits. If the coalition government in the UK actually wants to fix the housing bubble, they should not be trying to distort the market still further by attempting to create even bigger mortgages: they must instead impose the appropriate level of property taxes on those assets which are held to the benefit of foreign, non-resident owners. Doubtless unscrupulous legal and accounting advisers will try to create UK domiciled structures, but as elsewhere in the world, notably the US, HMRC should be allowed to look through those structures to determine ultimate beneficial ownership.

The London property market is wrecking British competitiveness, and without decisive intervention, to remove the low tax incentive for foreigners to invest, this will become permanent and crippling burden for the UK..    

Comments

Popular posts from this blog

Post Truth and Justice

The past decade has seen the rise of so-called "post truth" politics.  Instead of mere misrepresentation of facts to serve an argument, political figures began to put forward arguments which denied easily provable facts, and then blustered and browbeat those who pointed out the lie.  The political class was able to get away with "post truth" positions because the infrastructure that reported their activity has been suborned directly into the process. In short, the media abandoned long-cherished traditions of objectivity and began a slow slide into undeclared bias and partisanship.  The "fourth estate" was always a key piece of how democratic societies worked, since the press, and later the broadcast media could shape opinion by the way they reported on the political process. As a result there has never been a golden age of objective media, but nevertheless individual reporters acquired better or worse reputations for the quality of their reporting and

We need to talk about UK corruption

After a long hiatus, mostly to do with indolence and partly to do with the general election campaign, I feel compelled to take up the metaphorical pen and make a few comments on where I see the situation of the UK in the aftermath of the "Brexit election". OK, so we lost.  We can blame many reasons, though fundamentally the Conservatives refused to make the mistakes of 2017 and Labour and especially the Liberal Democrats made every mistake that could be made.  Indeed the biggest mistake of all was allowing Johnson to hold the election at all, when another six months would probably have eaten the Conservative Party alive.  It was Jo Swinson's first, but perhaps most critical, mistake to make, and from it came all the others.  The flow of defectors and money persuaded the Liberal Democrat bunker that an election could only be better for the Lib Dems, and as far as votes were concerned, the party did indeed increase its vote by 1.3 million.   BUT, and it really is the bi

Media misdirection

In the small print of the UK budget we find that the Chancellor of the Exchequer (the British Finance Minister) has allocated a further 15 billion Pounds to the funding for the UK track and trace system. This means that the cost of the UK´s track and trace system is now 37 billion Pounds.  That is approximately €43 billion or US$51 billion, which is to say that it is amount of money greater than the national GDP of over 110 countries, or if you prefer, it is roughly the same number as the combined GDP of the 34 smallest economies of the planet.  As at December 2020, 70% of the contracts for the track and trace system were awarded by the Conservative government without a competitive tender being made . The program is overseen by Dido Harding , who is not only a Conservative Life Peer, but the wife of a Conservative MP, John Penrose, and a contemporary of David Cameron and Boris Johnson at Oxford. Many of these untendered contracts have been given to companies that seem to have no notewo