Tuesday, September 02, 2008

Flash Gordon Sinks Further With Limp Stamp Duty Reform

Amid the meltdown of the British economy we hear Gordon Brown say that the "UK is well-placed to withstand the global downturn". Comforting Gordy, thanks, only the OECD forecast shows that Britain is the only major economy in the world which will face recession in the next six months.

The forecast is the first time a major international forecaster has explicitly said Britain is facing a technical recession, in which the economy contracts for two successive quarters.

Jorgen Elmeskov, the OECD's acting head of economics, said: "Financial market turmoil, housing market downturns and high commodity prices continue to bear down on global growth, while at the same time evolving rapidly.

So what do we have in response from Flash Gordon to save the UK? We have Alastair Darling, that’s what we have.

So, OK he has made a few cock-ups; business tax, capital gains tax etc but surely this time we will see something spectacular to give the UK the shot in the arm it needs?

(Drum roll please)... The suspension of stamp duty on properties under £175,000 for a year!!!


Stamp duty is to be suspended on homes worth less than £175,000 as part of a government bid to boost the ailing housing market. Alistair Darling announced that homebuyers will be offered a "holiday" from the tax, though it is unclear who exactly will benefit or for how long.

Forgive me for being sarcastic but isn't this a bit like giving free flights to Baghdad, free mountain tours in Afghanistan or would you like to have a free hotel stay in Mogadishu?

It's welcome, but does the labour government really think that this will help? Lets look at the average price of a house in the UK; £219,262 (according to the BBC) and the average salary in the UK (according to ONS) is approximately £22,000. Do the math on lending figures. Even if there are two people earning the national average wage they are still talking a loan of 5x earnings for an average house and they still would not benefit from this so-called 'relief package'.

In this current climate do you think that lenders will be doing much of this? Me neither. Also, do you think that suspending stamp duty will have new buyers rushing into the market, when most commentators think there is still plenty of downside? Not likely. There are other measures being brought in along with this including £200mn to help those already in homes.

While I applaud measures to help with those already in homes that are to be assisted with mortgage payments or shared equity deals, £200 mn doesn't seem a lot.

"We are looking at about £200 million over the next couple of years for families who are struggling with mortgages, there will also be £100 million to help with mortgage interest payments to keep people in their homes," Hazel Blears, Community Secretary told BBC Breakfast.

A friend (a Labour supporter) asked me recently "What would you do?". "Simple" I said

"Roll back the 1000's of stealth taxes that have been forced on the UK for the last 11 years, cut fuel tax, abolish stamp duty or re-introduce MIRAS (Mortgage Interest Relief At Source), regulate lenders more strictly so that loan procedures are followed, and suspend, for one year, all overseas spending on aid and loans.

Suspend funding of opera and any other thing that rich people can afford to fund anyway.... Basically, batten down the hatches and take a hit on revenue so that the British people can actually get through what is, no doubt, going to be a tough time.

My friend said "That's just ridiculous, can't be done, the rich should pay more in tax... that would sort it out"

And this is why the UK needs a new government, the only answer that Labour supporters have to the incompetency of this regime is to blame, and therefore tax, those who make the most money, oh and Flash Gordon... who, even in the Labour ads is known as "Not flash, just Gordon". I coudn't agree with Labour more... Flash Gordon was one of my childhood heroes...Gordon Brown couldn't be less heroic.

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