Croydon Council

[noggins]

But who do Croydon actually owe the money to? If it was a business, the creditors would have to accept x pence in the pound, what is different?

Answering my own question part of it "£542 million borrowed to invest in property and housing developments"
Cant they tell those lenders to f.ck off while still paying Croydon Catering Supplies Ltd for the bin bags ?

[monkey]

Could a council levy a property tax without Westminster's permission?

Scotland can't do its own taxes without Westminster permission, and Scotland's a whole country.

[sTeamTraen]

But who do Croydon actually owe the money to? If it was a business, the creditors would have to accept x pence in the pound, what is different?

Answering my own question part of it "£542 million borrowed to invest in property and housing developments"
Cant they tell those lenders to f.ck off while still paying Croydon Catering Supplies Ltd for the bin bags ?

No. Otherwise nobody would ever lend any local council any money ever again. You can't build council houses from current cash flow. (There are, of course, many other reasons council houses aren't being built, but this would put a complete stop to it pretty quickly.)

[Herainestold]

The whole system is dumb. Westminster should fund local authorities from general tax revenue (or borrowing or whatever).
Submit a budget, it will be approved in some mannner. Of course not everything will be approved and there would be some negotiations.
Westminster remits the funds to the local authorites and they proceed to spend it. It is obviously more efficient to have one entity that has expertise in collecting, managing and disbursing funds, than a hodge podge of different actors a good proportion of whom appear to be incompetent.

[Sciolus]

But who do Croydon actually owe the money to? If it was a business, the creditors would have to accept x pence in the pound, what is different?

Answering my own question part of it "£542 million borrowed to invest in property and housing developments"
Cant they tell those lenders to f.ck off while still paying Croydon Catering Supplies Ltd for the bin bags ?

No. Otherwise nobody would ever lend any local council any money ever again. You can't build council houses from current cash flow. (There are, of course, many other reasons council houses aren't being built, but this would put a complete stop to it pretty quickly.)

Governments and the public sector can borrow far more cheaply than private companies, and a major reason for that is that it is extremely low risk for lenders. Defaulting would cost more in future borrowing costs than it would save.

[Millennie Al]

I don't think the UK has a property tax at all, really, unless I'm missing something?

Business rates are property taxes, and council tax is a property tax with a fake beard and floppy hat.

Taxing wealth rather than income does seem "fairer" to me somehow,

So someone who saves a large sum over 40 years and then spends it should pay more tax than someone else who speds as they earn? What's fairer about that?

especially forms of wealth like property that are (a) unproductive and (b) only increase their value by restricting availability of a basic human necessity.

Property cannot be both unproductive and meeting a basic human necessity. Property increases in value because people want it more, sometimes because there are just more people around and sometimes because more people want to be in a particular location. That's pretty difficult to prevent.

[dyqik]

I don't think the UK has a property tax at all, really, unless I'm missing something?

Business rates are property taxes, and council tax is a property tax with a fake beard and floppy hat.

With a cap that makes the council tax particularly regressive.

Taxing wealth rather than income does seem "fairer" to me somehow,

So someone who saves a large sum over 40 years and then spends it should pay more tax than someone else who speds as they earn? What's fairer about that?

Someone who spends as they earn pays VAT as they go on many items they spend on. The person saving doesn't. Obviously there is tax on interest and capital gains tax that come into things as well.

There's almost certainly a balance between taxing income and taxing wealth that works best. Progressively taxing wealth over some significant threshold, and income over different thresholds means you can do this balancing act in all sorts of ways.

especially forms of wealth like property that are (a) unproductive and (b) only increase their value by restricting availability of a basic human necessity.

Property cannot be both unproductive and meeting a basic human necessity.

Yes it can. Humans need a minimum amount of access to housing and property, but they don't need more than a couple of spare bedrooms, or a grouse moor. The property held over requirements that isn't used as a resource for economic activity is unproductive.

[Bird on a Fire]

Renters pay council tax, not landlords. There are even council tax discounts for empty property and under-inhabited property.

Hoarding wealth harms social mobility, and thus meritocracy, and therefore should be punitively taxed like other societally damaging activities. Instead, we tax outflows of money into wider society, but don't tax hoarding it.

Nice of dyqik to out himself as a pinko communist though. I need my grouse moor, and I earned it myself by being born into a grouse moor-owning family with centuries-longstanding ties to the crown and it employs hundreds of people every year to burn the peat and smash the Hen Harrier eggs and threaten the Ramblers so really I'm doing the world a favour by owning it and managing it for the sole purpose of breeding and shooting a single species of game bird and any suggestion that some of my wealth could be used to feed hungry children and resuscitate grannies and generally help normal modern people who don't engage in bloodsports is frankly outrageous.

[jdc]

Renters pay council tax, not landlords. There are even council tax discounts for empty property and under-inhabited property.

Hoarding wealth harms social mobility, and thus meritocracy, and therefore should be punitively taxed like other societally damaging activities. Instead, we tax outflows of money into wider society, but don't tax hoarding it.

Nice of dyqik to out himself as a pinko communist though. I need my grouse moor, and I earned it myself by being born into a grouse moor-owning family with centuries-longstanding ties to the crown and it employs hundreds of people every year to burn the peat and smash the Hen Harrier eggs and threaten the Ramblers so really I'm doing the world a favour by owning it and managing it for the sole purpose of breeding and shooting a single species of game bird and any suggestion that some of my wealth could be used to feed hungry children and resuscitate grannies and generally help normal modern people who don't engage in bloodsports is frankly outrageous.

You pay double for empty properties round our way (might be "empty and unfurnished"). I think it's treble after something like 3 years empty. You do get a single-occupant discount though.

[Bird on a Fire]

That's cool, but I did check on the Googles and apparently it varies nationally.

The main thing is I've paid council tax without opening property.

[jdc]

Yeah, I suspect our council of being dirty commie bastards. When their central grant was cut, they had to lose some services; when it came to e.g. shutting libraries it was the ones in the nice, middle-class areas that were top of the hit list (some are still open - the nice areas tend to be the ones that have parish councils that will take over things the district council no longer want to provide).


Here's the correct version of my misremembered facts in my previous post: Spoiler:

[Date of increased charge for empty property - Number of years the property has been empty - Amount of extra Council Tax - Total amount of Council Tax to pay]
1 April 2019 2 100% 2 times the usual amount
1 April 2020 5 200% 3 times the usual amount
1 April 2021 10 300% 4 times the usual amount

Properties left unoccupied and unfurnished will be charged an additional amount of Council Tax

Care-leavers, singles, charitable orgs discounts are available and "Council Tax Reduction can help you pay your Council Tax bill if you are on a low income or claiming other benefits." You can get property-based exemptions - including a 1-month exemption for an unoccupied property that's undergoing repair (the others are for things like empty properties normally inhabited by prisoners, students, resident patients, ministers of religion, or the dead).

eta: spoilered for brevity

[Millennie Al]

Taxing wealth rather than income does seem "fairer" to me somehow,

So someone who saves a large sum over 40 years and then spends it should pay more tax than someone else who speds as they earn? What's fairer about that?

Someone who spends as they earn pays VAT as they go on many items they spend on. The person saving doesn't. Obviously there is tax on interest and capital gains tax that come into things as well.

They'll pay the same VAT regardless (assuming they buy the same things and the VAT rate isn't changed in 40 years). For example, if every year you spend £100 + £20 VAT, then you end up spending £4000 + £800 VAT. If you save it all up and spend £4000 on the same things, you still get charged £800 VAT. If you were saving in an account whose interest rate was 5% (not realistic nowadays), you would have earned £10,420.77 in interest. A simple wealth tax (i.e. one which is just a fixed percentage of your wealth every year) would consume some of that (or all if the wealth tax was the same as the interest rate, but that is much more than people usually suggest for such a tax).

There's almost certainly a balance between taxing income and taxing wealth that works best. Progressively taxing wealth over some significant threshold, and income over different thresholds means you can do this balancing act in all sorts of ways.

especially forms of wealth like property that are (a) unproductive and (b) only increase their value by restricting availability of a basic human necessity.

Property cannot be both unproductive and meeting a basic human necessity.

Yes it can. Humans need a minimum amount of access to housing and property, but they don't need more than a couple of spare bedrooms, or a grouse moor. The property held over requirements that isn't used as a resource for economic activity is unproductive.

You mean there should be a bedroom tax?

[Millennie Al]

Renters pay council tax, not landlords.

Renters would pay any wealth tax. Imagine a landlord who has no other assets - they must pay the tax from the rent, so th erent reflects the tax.

Nice of dyqik to out himself as a pinko communist though. I need my grouse moor, and I earned it myself by being born into a grouse moor-owning family with centuries-longstanding ties to the crown and it employs hundreds of people every year to burn the peat and smash the Hen Harrier eggs and threaten the Ramblers so really I'm doing the world a favour by owning it and managing it for the sole purpose of breeding and shooting a single species of game bird and any suggestion that some of my wealth could be used to feed hungry children and resuscitate grannies and generally help normal modern people who don't engage in bloodsports is frankly outrageous.

How do you use the grouse moor to feed hungry children? Plough it all into farmland? Or maybe you use it for housing, so you pave it over to build houses. To resuscitate grannies, presumably you pave it over to build a hospital, or to build accommodation for medical staff, or a research lab.

[Bird on a Fire]

no you tax it and spend the tax money on those things (we are talking about property tax remember)

how best to manage the land is a separate question, but e.g. restoring the peatlands would absorb more carbon than equivalent area of forest, plus benefits for water management, biodiversity, public recreation etc etc (land management decisions can be influenced via taxation and other subsidies)

[dyqik]

So someone who saves a large sum over 40 years and then spends it should pay more tax than someone else who speds as they earn? What's fairer about that?

Someone who spends as they earn pays VAT as they go on many items they spend on. The person saving doesn't. Obviously there is tax on interest and capital gains tax that come into things as well.

They'll pay the same VAT regardless (assuming they buy the same things and the VAT rate isn't changed in 40 years). For example, if every year you spend £100 + £20 VAT, then you end up spending £4000 + £800 VAT. If you save it all up and spend £4000 on the same things, you still get charged £800 VAT. If you were saving in an account whose interest rate was 5% (not realistic nowadays), you would have earned £10,420.77 in interest. A simple wealth tax (i.e. one which is just a fixed percentage of your wealth every year) would consume some of that (or all if the wealth tax was the same as the interest rate, but that is much more than people usually suggest for such a tax).

Superficially, that looks like the case, but large wodges of savings are often used in ways that mean that VAT isn't charged on the things they are used for, or to reduce the total amount paid: foreign holidays, property, university tuition, buying stuff outright rather than on loans, etc.. Or just not spent at all.

Property cannot be both unproductive and meeting a basic human necessity.

Yes it can. Humans need a minimum amount of access to housing and property, but they don't need more than a couple of spare bedrooms, or a grouse moor. The property held over requirements that isn't used as a resource for economic activity is unproductive.

You mean there should be a bedroom tax?

Of a carefully designed kind, with thresholds and progressive rates so that it has a net beneficial effect, sure. Of course a literal tax on every spare bedroom, and only on spare bedrooms, would be silly.

[Millennie Al]

Someone who spends as they earn pays VAT as they go on many items they spend on. The person saving doesn't. Obviously there is tax on interest and capital gains tax that come into things as well.

They'll pay the same VAT regardless (assuming they buy the same things and the VAT rate isn't changed in 40 years). For example, if every year you spend £100 + £20 VAT, then you end up spending £4000 + £800 VAT. If you save it all up and spend £4000 on the same things, you still get charged £800 VAT. If you were saving in an account whose interest rate was 5% (not realistic nowadays), you would have earned £10,420.77 in interest. A simple wealth tax (i.e. one which is just a fixed percentage of your wealth every year) would consume some of that (or all if the wealth tax was the same as the interest rate, but that is much more than people usually suggest for such a tax).

Superficially, that looks like the case, but large wodges of savings are often used in ways that mean that VAT isn't charged on the things they are used for, or to reduce the total amount paid: foreign holidays, property, university tuition, buying stuff outright rather than on loans, etc.. Or just not spent at all.

If the relevant factor is the things that the money is spent on, then just tax the spending. It does not seem reasonable to me that someone who saves to pay for something should be taxed at a different rate to someone who borrows to pay for it.

[Millennie Al]

no you tax it and spend the tax money on those things (we are talking about property tax remember)

Ah. I see. You want more rapacious capitalists who ruthlessly exploit their assets.

[dyqik]

no you tax it and spend the tax money on those things (we are talking about property tax remember)

Ah. I see. You want more rapacious capitalists who ruthlessly exploit their assets.

Ah, I see. You want to insult people rather than listening to them to try and understand what they mean.

Goodbye.

[Millennie Al]

no you tax it and spend the tax money on those things (we are talking about property tax remember)

Ah. I see. You want more rapacious capitalists who ruthlessly exploit their assets.

Ah, I see. You want to insult people rather than listening to them to try and understand what they mean.

I have no intention of insulting people, just pointing out a natural consequence of the policy. If you look back at the Beeching cuts to the railways, a similar effect is observed - once lines were no longer productive they were sold off, which resulted in it being impossible to reinstate them when rail started to look more attractive. And in the corporate world, there are people who seize control of a company in order to sell off some part that seems less productive, which results in a profit. Sometimes a business such as a retailer will decide that running the business is more profitable than owning the premises. Which leads to selling off the premises and renting it back. In the short term this generates more profit, but it also makes the business more vulnerable to economic conditions - now it has an ongoing obligation to pay the rent, so is less able to ride out variations in circumstances.

[noggins]

Whats wrong with capitalists ruthlessly exploiting their assets? Thats the point isnt it? If a company sells some asset or division its only because some buyer values it more.

[jimbob]

What would you propose as an alternative?

I don't know, but I think it has to involve the individuals who took (or failed to take) the decisions. Maybe it would be clearer if we first sorted out the issue of corporate fines, where as I said, yes, it affects dividends, but it doesn't hit the decision-makers especially hard unless they are major shareholders.

This.

If it's someone's negligence, then it's them that should be punished. Organisations are not guilty, the people in the organisations are guilty.

[Sciolus]

Given the impunity with which corporations kill people, I wouldn't hold my breath.

[Millennie Al]

Whats wrong with capitalists ruthlessly exploiting their assets? Thats the point isnt it? If a company sells some asset or division its only because some buyer values it more.

It's not as simple as that. I'll give a very simplified example. Suppose shareholders raise $2,000,000 to start a retail business. $1,000,000 buys premises and $1,000,000 covers everything else - stock, wages etc. The business makes 7.5% return on investment ($150,000) which is very nice. But the shareholders realise that business rents are about 5%, so their business can be considered to be making 5% on the $1,000,000 tied up in the premises and 10% on the rest of the business. So they sell the premises for $1,000,000 and rent it back at $50,000 per year (the going rate of 5%). Paying for the rent from a year's profits leaves $100,000 profit, or 10% return on the $1,000,000 tied up in the business. With the $1,000,000 raisd by the sale, the business can create another retail outlet following the same model elsewhere, giving a total return of 10% (or, of course, do something else such as return the $1,000,000 to shareholders for them to invest elsewhere as individuals).

But now consider what happens when economic conditions turn bad to the extent that the original business would have made zero profit. By renting instead of owning the premises, the business now has to find $100,000 rent for the two sites, but has no profit to pay it, so the business is insolvent and fails (in the real world, it would probably get a loan, or have a rights issue, or do something more complicated). The problem is that by focusing so narrowly on one thing, the business success becomes more volatile. (It works both ways - if economic conditions had got more favourable, the profits would have increased faster).

If you look at what businesses actually do, you'll find a mixture of ones which sell off bits to focus on their core business, and others which do the opposite (buy other businesses or start up new divisions) to diversify the business. Both work in moderation, but an excessive greed will eventually destroy a business.

[noggins]

Or, the same wider economic factors that nobbled their profits have also hit commercial property values leaving them doubly f.cked.