The Labour Party could bring in a radical “right to buy” scheme if it gains power at the next general election which could help millions of private tenants in the UK to buy their rented homes at a reasonable price, the shadow chancellor has suggested.
John McDonnell is promoting the idea as a way to make it easier for workers to buy the homes they live in, while also tackling what he calls the “burgeoning buy-to-let market” and the problem of landlords who do not maintain their properties.
In what would be a day of reckoning for many of Britain’s 2.6 million landlords, the mooted right-to-buy scheme in the private housing market would echo Margaret Thatcher’s policy of the 1980s relating to government housing, under which millions of council tenants bought the property in which they lived. Mr McDonnell set out some loose guidelines for the Labour idea – first suggested by Jeremy Corbyn during his 2015 bid for leadership of the party – based on the premise that the sum paid by tenants wishing to buy their dwelling would not necessarily be the market price.
“You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy,” he told the Financial Times. “You (the government) set the criteria. I don’t think it’s complicated.”
Mr McDonnell suggested the plan would be a way of redressing problems such as landlords refusing to invest in their properties while making a “fast buck” at the cost of their tenants and the community.
“We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and these problems,” he said.
Mr McDonnell also detailed a bold share transferal proposal, under which a Labour government would confiscate some £300 billion of shares in 7,000 large companies and hand them to workers, in what would be one of the largest ever raids by a government on the private sector seen in a western democracy. Under that plan, every company with more than 250 workers would have to gradually transfer 10 per cent of their shares to their employees, the paper said.
The Labour Party recently commissioned a proposal paper entitled: ‘Land For The Many: changing the way our fundamental asset is used, owned and governed’ which can be downloaded here (pdf).
Within this, a number of recommendations for reform are set out for possible inclusion in the next Labour party manifesto.
While much of the paper focuses on land ownership in England, the paper also includes a number of recommendations regarding inheritance tax and amendments to the current rates of capital gains tax.
In this note we provide a brief summary of these proposals.
1. Increasing Capital Gains Tax rates
The paper sets out a number of proposed changes to the current system of taxation. One significant proposal is to increase capital gains tax rates for certain transactions. The proposal is that the rate of capital gains tax for second homes and investment properties be increased so that it is in line with current income tax rates.
Currently this would mean a rate of 20% for basic rate payers (as compared to the current rate of 18%) and 40% for higher rate taxpayers (as compared to the current rate of 28%). The policy behind this is a desire to combat what is described as the intuitively unfair policy of taxing “income” derived from asset appreciation, which they state requires no work, at a lower rate than income derived from labour.
The possibility of removing principal private residence relief (which can often exempt property sales from tax) is also raised. While this is given consideration, the paper does acknowledge that it could create difficulties when people look to move house. As such, the paper favours reforming inheritance tax as a means of redistributing wealth.
2. Replacing Inheritance Tax with Lifetime Gifts Tax
The second proposed change to the tax system lies in the abolition of inheritance tax and its replacement with a lifetime gifts tax. Such a system would be intended to tax all gifts during life, with death acting as a final gift (this is similar to the regime of “capital transfer tax” that was in place prior to 1986).
The proposal finds its basis in the work of the Resolution Foundation and the Institute of Public Policy Research and has received public support from the shadow chancellor, John McDonnell.
Under the proposed system, each individual would receive a lifetime allowance of £125,000 for gifts that they receive. Once this limit was reached the recipient of a gift would be taxed. The rates of tax that would apply are not fully set out.
The Labour proposal paper refers to gifts being taxed at the rate of tax on “income from labour” (which could be as high as 45%, or more if national insurance was also charged).
As a comparison, under the modelling set out by the Resolution Foundation (on which the proposals are based) the rate of tax is initially set at 20% with a top rate of 30% for lifetime gifts exceeding £500,000. They predict that such a change, if implemented, would see the system bring in £11 billion in the period 2020-21 compared to the £6 billion predicted to be brought in by the current inheritance tax system.
It is also suggested that because each recipient would have their own allowance (as compared to the current, “nil rate band regime”) such a system would encourage the distribution of wealth to those who have not received large lifetime gifts previously, and as such would encourage a wider spreading of wealth. It is expected that a full spouse exemption would also operate.
The proposal paper recognises that such a system would take time to implement, but again highlights the Labour plan to reverse the Conservative government’s introduction of the inheritance tax residence nil rate band.
Finally, the paper also calls on a new tax be introduced to tax “equity withdrawals”. No further details are provided.
3. Reform to Business and Agricultural Property Exemptions
The final arm to the proposals concerning the reform and potential replacement of inheritance tax is that consideration should be given to the reform of both business and agricultural property relief.
While the paper does acknowledge the importance of such reliefs, it raises the possibility of recasting both reliefs so that they act as a form of tax deferral rather than a full relief.
Under the proposals, the revised reliefs would defer a tax charge until the eventual sale of an asset, or on a business ceasing to trade. This would be similar to “woodlands” relief, which can currently operate to defer tax on woodlands until the timber is cut.
Finally, the paper also addresses what it takes to be abuse of the tax system by people who seek to mitigate inheritance tax liabilities by investing in farmland and forestry assets. It suggests that this area be given a further review in future with a view to removing the opportunities to use such assets as a tax shelter.
The changes, if implemented, could have a very significant impact on succession plans currently in place or under consideration, and at a time of significant political change.
It should be remembered that at this stage, it is only a proposal document but clearly there are major implications should even some of this be brought in to our tax code in the future.
Has anyone stopped to think what would happen to our wonderful country if this MORON were able to sneak in to Number 10? Here is a man with an inherent contempt of the free market, a free economy, fair competition and most importantly free thinking. We have seen Marxism in its worst form over the last century, we are all aware what the Stasi did to all those who’s line of thinking did not fit in with the narrative. People were punished for free thought, for objecting to the mind control, this ranged from anything from arrest and persecution to torture in a Mental asylum.
WE MUST NEVER ALLOW THIS TO HAPPEN AGAIN
This man wants to destroy prosperity, he wants to take away everything you have worked for and give it to those who refuse to work for it, when they run out, he intends to import more and more, until you are little more than mention in the history books.
This is not a change in taxation, this is state theft on a grand scale, Mr Corbyn should be seen for exactly what he is and NEVER allowed in to power!
The former Prime Minister accused his successor as party leader of suggesting that Conservative and Labour governments had been “all the same” over the past thirty years, as he declared: “Enough is enough.”
The intervention comes after Mr Corbyn told an education conference last week: “For decades we’ve been told that inequality doesn’t matter because the education system will allow talented and hard-working people to succeed whatever their background.”
Mr Blair – a frequent critic of Jeremy Corbyn’s record as Labour leader – reeled off a string of achievements by governments he led, saying that 1997 to 2010 had seen “the most dramatic improvements in our public services with the largest ever peacetime investment in them”.
He talked up the Government’s work to cut pensioner and child poverty, provide compensation for miners hit by breathing problems – and defended Labour’s changes to the tax and benefit system while in office.
“The poorest 10% of households gained by something like 13% in their incomes, whilst the richest 10% lost by almost 9%,” he said.
Mr Blair added: “We made the UK more equal, more fair and more socially mobile. And we never, ever said inequality didn’t matter or that tackling it was not a priority of the Government.
“And by the way, what we did at home, we also did abroad, trebling help to the poorest countries, mobilising the international community in support of action against global poverty and becoming the first major developed nation to hit the 0.7% of GDP aid target.
“Of course, like any government we had faults, failures and did things people disagreed with.
“But don’t tell me or those who worked with me or those who were part of the Labour Party at the time, that we did nothing for the poorest in our country or the world. We did and we’re proud of it.”
This is just another example of the psychopath that is Blair, interfering in the workings of government. He had obviously sold his soul to the Devil a long time ago and everything he did was about appeasing the political classes, appeasing Europe and doing his part of the Globalisation agenda.
He led this country in to a war that was based on lies, DAMNED LIES, he instigated the opening of the floodgates allowing an invasion of immigrants never seen before in history!
Kate Osamor lives in a £750,000 council house along with her son Ishmael, He is a former councillor who resigned after being convicted of drugs offences.
She earns £77,379 as an MP while he earns £43,835 as her Chief of Staff. Ms Osamor tweeted over Christmas that she is proud to be in a council house
The council house is in Haringey, where there are 10,000 families waiting for a home. Miss Osamor, 50, continues to live there despite earning a salary of £77,379 plus expenses. Her son Ishmael earns up to £43,835 as his mother’s chief of staff.
Is this really the state of affairs now? Positive discrimination gone mad! When did this country decide to get on its knees and overlook so much wrongdoing just because the person concerned is a minority. It seems that the bias against White people in the UK has reached an alarming level that will surely result in a backlash at some point.
People cannot be allowed to blatantly take advantage and arrogantly flaunt their actions in the faces of people who are now at a clear and distinct disadvantage just because they ARE NOT a minority.