Dogs that don’t bark in the night, middle class welfare and other Election heresies…

heresyI am always interested in the issues that don’t appear in Election debates, and the questions which politicians chose not to ask. Take, for example, the issue of middle class welfare…

As I write this the outcome of the General Election is far from clear. So, if a Green/SNP/Plaid Cymru coalition sweeps to power on 8th May on a joint pledge to abolish inequality within 100 days, you can safely ignore everything below. Failing that…

Even before the election campaign proper got started, the Churches were simultaneously under attack and praised for speaking out in favour of the ‘Common Good.’   “Get your noses out of politics”, was the familiar refrain from some quarters.  But in the words of Archbishop John Sentamu

“For Jesus, the head of Caesar may be on the coin, but all things belong to God. So giving must be first to the Lord and Caesar may get what God permits Caesar to take! To suggest that some areas of life are off-limits for the Almighty is at best ignorant and at worst heretical.”

That said, there do still seem to be some topics which remain heretical even for the churches to discuss.

We’re all too aware that the benefits bill is apparently “out of control.”   Politicians and newspapers have been telling us this for years. But who would have known that almost half of the ‘benefits bill’ is actually goes to pensioners, and that unemployment benefits spent on the so called ‘shirkers’ account for less than 2 ½ pence in every pound of welfare spending?

middle classBut what about middle class welfare?

Unless I’ve missed it, politicians, political commentators and newspaper proprietors haven’t been jumping up and down about the billions spent each year on subsidising the lives of those who already have it good.

If you earn enough to be a higher rate taxpayer (that’s over £42,000), you are eligible for ‘higher rate pension tax relief.’ In simple terms, that means that if you save £100 into a pension, you only have to pay in £60 and the Government puts in the other £40. If you are an ordinary rate taxpayer, you have to put in £80 to save £100 – and if you’re don’t earn enough to pay tax, then you have to put the full £100 in to save £100. This tax loophole for the relatively wealthy costs the rest of us £7 billion a year – more than the total cost of benefits paid to the unemployed.

Then there is Housing Benefit – allegedly a benefit for ‘the poor’ – and one of the fastest growing areas of the benefits bill. In fact, £9 billion of Housing Benefit is now paid out directly into the pockets of private landlords. Many are respectable, to be sure, but plenty have been taking advantage of booming house prices by pushing up rents to sky high levels – and effectively profiteering at the taxpayers expense.

And just in case your smugly sitting there thinking ‘none of this applies to me’ – if you are a homeowner, you too (and yes, me too) benefit from middle class welfare, in the form of completely untaxed – and unearned – earnings from the growth in house prices.   Even in the middle of the worst recession for more than seventy years, the ‘value’ of housing has continued to increase in many parts of the country. In London alone, house prices are now more than 40% higher than they were in 2008 – up over 13% in the last year – to an average of £464,000. In simple terms, this means that every homeowner in London is now on average £180,000 wealthier than at the start of the economic crisis. And of course, those lucky enough to own more expensive properties will have seen the value of their properties increase by much greater amounts.

So never mind taxing the windfall house-prices-up2profits of the energy companies, what about taxing the windfall profits of homeowners, who have seen gains of hundreds of thousands of pounds over the exact same period that others have seen their real incomes and benefits squeezed?

In case any of you shriek – how could I possibly pay that – you would only pay the tax at the point when you sell the property and realise the gain. It’s a simple tax, its called capital gains tax, and it already exists on second properties. So why not on people’s first homes?   It’s a tax that would, in all likelihood, raise billions of pounds a year, and do away with the need for any further cuts in the ‘welfare’ budget.

But it would, of course, offend the millions of ‘hard working’ homeowners, whose votes the political parties are seeking to sway.

So, who now is for the Common Good?

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One Response to Dogs that don’t bark in the night, middle class welfare and other Election heresies…

  1. Don’t forget that tax deductions of mortgage interest on rental properties costs us 5 billion per year so landlords are getting 14 billion

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