Twenty million quid!
‘Cos we’re borassic thanks to bankers, Patricia Hewitt, an’ being crap!
By destroying the UK holiday sector!
Twenty million quid does sound like a lot of money. To the likes of you and I, life-changing money.
But in the world of multiple noughts that is fiscal policy, it is a minute sum of money. Patricia Hewitt (when Health Secretary) wasted twice as much every day she was in the job – buying into Connecting for Health alone cost us all £23 billion* – over a thousand times more than the Revenue now plans to collect from a new stealth tax.
Under this new proposal, anyone getting rental income on a UK holiday home for more than seventy days a year will be subject to taxation which will (thisismoney.com reckons) average out at about £4000 per home. Or put another way, all the profit they’d make from doing it.
Ahbutahbutahbut I hear you giggle while nudging your partner, I bet the only reason he’s whingeing on about this is that he rents out his holiday home. But you’d be wrong, because I rent out my main residence – having a holiday home abroad I don’t rent out at all. So the richer bastards like me will get off scot-free. It’s great this, isn’t it? But hold onto your wallets, because it gets better.
I am willing to wager that, at just four paragraphs in, 90% of you are already thinking that this is going to do more damage to the economy than it costs to collect it – as well as saving the jobs of yet more civil servants.
Is the correct answer. As tim.com asserts, ‘…many could be forced to stop letting, leading to businesses closing and jobs being lost. Analysts estimate the move could cost the tourist industry £200m a year’. So for every Pound collected, the income of UK plc falls by ten times as much.
It is such a Page One point. And each time these bizarre ideas pop out, I have the same thought: surely somebody in the room when this idea was being floated could’ve put a hand up and said ‘Don’t be silly’. I’ve no idea how civil servants say that sort of thing to other civil servants: probably something like ‘Could we just review this going forward before the path analysis becomes critical re the negative downside equational outcomes?’ Either way, it doesn’t really matter. But do we see evidence as to why not in this case….and it is contained in the rationale put out by those on their way through Sherwood Forest laden with sacks?
‘The Treasury says the current rules breach European law and that Britons enjoy greater tax benefits than those who rent out second homes anywhere else in the EU’
This from a country that isn’t even in the Euro: ‘Sorry chaps, EU rules. Can’t be helped’.
It’s the normal obfuscation, this time minus any subtlety. The actual number of tax arrangements (outside of VAT) that are truly harmonised in the EU is vastly outnumbered by the tens of thousands that aren’t. Not only is the excuse risible, it also hands another 50,000 votes to the quair fellahs at UKIP.
But while we’re here, let’s make a few other points. First, the tax will hit a UK tourism industry already hammered by a poor summer and limited spending money. Second, it will punish the over 55’s – who predominate in the sector – already facing zero income thanks to the equally misguided policy of keeping interest rates low. And last but not least, it will hit rural areas already knackered thanks to the jolly socially responsible buying policies of Tescomnivore et al.
But apart from that Mrs Lincoln…..
The bottom line is that we need two major reforms as an infill before the whole tax system is radically changed: a blanket ban on any new tax collecting under £2 billion; and the introduction of external commercial monitors to check that the lads with the shovels know the Tuesday/Marble Arch difference.
* The Treasury continues to claim the figure is £12 billion, but it isn’t. And if they want to challenge me re this one, bring it on tax guys.