How Very Un-Tory

Apparently Britain’s new Conservative (?) Prime Minister thinks owning second homes is “not necessarily a splendid investment for the whole economy” and therefore it is okay to raise Capital Gains Tax on the sale of them from the current 18 percent to possibly as much as 50 percent. This is all part of his so-called “fairness agenda” – CGT tax increases will allow the coalition government to take more people at the bottom out of tax altogether – that is to say, he will assist those who didn’t vote for him and kick in the teeth the people he did.

Aside from the electoral risk down the road of doing that – and let us leave out for the sake of this posting the fact that the Tories did not campaign on increasing CGT on second homes or shares – it is hard to fathom the “fairness” here.

About 250,000 British families own a second home and that there are one million buy-to-let properties. Many who bought a second home are not wealthy but decided after the Brown government raided private pensions that the best way to help weather their retirements with a little bit of dignity was to invest in property. After all no one can live on the old age pensions the UK supplies – that is if they want to avoid penury. So Cameron is punishing the people who are trying to ensure that they are not an increasing charge on the State.

No one doubts that Britain’s financial state is parlous but the emphasis must be on spending cuts and not tax increases — that is both a matter of fairness and good economic sense: Britain’s only hope is to grow out of the crisis.

At 50 per cent there will be a devastating effect on people who have bought buy-to-let properties as part of their pension investments.

Also as David Salusbury, the chairman of the National Landlords Association, has pointed out the CGT increase will “act as a barrier to further investment in residential property just at a time when there is an urgent need for more housing”.

At Last — Cameron Gets Out Ahead

British Tory leader David Cameron is now calling clearly for a radical redistribution of power in the UK. His redefining of the relationship between the people and the political elite is a cogent and intelligent response to the House of Commons expenses scandal that has been roiling British politics for several weeks now. “I believe there is only one way out of this national crisis we face,” he said. “We need a massive, sweeping, radical redistribution of power. From the state to citizens; from the government to parliament; from Whitehall to communities; from Brussels to Britain; from judges to the people; from bureaucracy to democracy. Through decentralisation, transparency and accountability, we must take power away from the political elite and hand it to the man and woman in the street.”

Stirring stuff. But one of the big questions is why Cameron took so long to engage in this way. He has been more nimbled-footed than Gordon Brown in trying to get out ahead of the crisis and pressured his team to come clean about their expenses and to get them sorted. But why wasn’t he much tougher on offending Conservative  MPs and instead of just telling them, for example, to explain themselves to their constituency parties, withdrawing the Whip from them? After all, many of them are not his allies and he could have used this crisis as an opportunity to crush his right-wing opponents and mold the party more into the centrist image he would like. A lack of political courage or intellectual forethought?

On his more general point that a redifintion of power is needed, again there is a sense here of a lack of foresight. Back in 2006, I argued in a Cato podcast that Britain was crying out for a civil libertarian mesage — that ordinary Brits were getting sick and tired of the Big Brother state created by New Labour. At last a “freedom” message is coming from the Conservatives.