21 April 2009

Want To Avoid Tax? Google It!

The consensus amongst the majority of people seems to be that we need to spend money on infrastructure and in particular building council housing.

We have already thrown about £70bn of taxpayers money to prop up the banking system (money that was mostly wasted on rich people's bonuses and frivilous imports), so why not a similar amount on something where we will have something useful for future generations who will pick up the bill. Most of the £170bn of borrowing this year is because of this banking collapse - can the Tories please tell us what would have happened if the banking system had been allowed to collapse? Because that is the implications of their policies. As Larry Elliot emphasises today, the UK's debt was very low by G7 standards coming into this recession and will remain average - the interest on gilts is still low and is not a problem - the market is still willing to lend to government.

We need to build 300,000 houses a year just to keep up with demand, we have been building less than half that in the boom years and maybe less than 70,000 this year. If there is going to be one legacy of the £170bn debt. Let it be housing for future generations. Not only will this money remain in the domestic economy (unlike VAT cuts), it will be targeted to the industry hardest hit where unemployment is already a problem - construction. There are rumours £1bn might be spent when £70bn is probably needed. This government are doing too little, too late - but better late then never as they say - with one year left they could still make a difference. But Gordon Brown wouldn't be Gordon Brown if he was brave.

There are many other things this chancellor should do to make taxes fairer - widen council tax bands or better still gradually abolish it and replace it with a land value tax that encourages land use rather than mere speculation. If there is one thing we have learned from this recession, it has to be that speculation is a bad thing. Also of course, we hear that Google, like every other corporation can make billions in profit here and pay little or no tax. Surely even fair minded conservatives think this is not fair? A simple law change on this, not likely, but we live in hope.

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