Taxing the Property Ladder Instead of Inheritance

Heres an idea to throw around, over at the Guardian CiF yesterday, Peter Franklin was commenting on a proposal from Stephen Byers to abolish inheritance tax. I know some of you would be happy to end it there, but for the sake of social justice Franklin suggested that a more effective tax would be on the property market.

“On the other hand, inequalities in wealth are wider than ever and a great deal of inherited wealth was never earned in the first place but is instead derived from Britain’s insane rate of house price inflation.

…

The new tax could replace stamp duty, too, which is itself unfair because it takes no account of profit made and hence ability to pay. Replacing two taxes with one should also reduce collection costs, especially as the stamp duty infrastructure could be adapted to the new arrangement. By way of further benefits, the new tax would be much harder to wriggle out of and would act as a dampener on house price booms.

Of course, it would not be a good idea to give the government a direct financial interest in house price booms, so the proceeds of the tax should be hypothecated. And what more appropriate use could there be than rebuilding and repairing Britain’s social housing stock? At least that way more people would benefit from rising house prices.”

It seems that in light of what we were discussing recently surrounding the provision of social housing (and the numbers that seem to be necesary to reinforce the market) a proposal like this may be worth considering.

There area plenty of issues raised in the comments to the article and Im not going to detail them here, it does seem to offer a paralell process to delivering better social infrastructure while attempting to even out the current inequalities in property wealth.

Or the brothers Ahern could have a chat and come to try to sort out the speculators/developers inflating the bubble.