torsdag 9 november 2006

Higher interest rates - bad decision

TODAY Interest rates have been raised to curb inflation.

The biggest inflation driver is high land prices which shows up as higher property and house prices.

Higher interest rates will hit marginal firms and businesses and even those borrowers who rent their properties and do not have mortgages.

The beneficiaries are those who are not producers but those who live on investments.

Instead of higher interst rates why does the Chancellor not tackle the problem at its source and introduce an Annual Land Value Tax on all land (LVT)?

This would reduce inflation, allow lower interest rates, dampen the property boom and provide the government with income for essential infrastructure and to enable it to reduce harmful taxes like VAT.

In addition, a useful side effect of LVT would be to encourage the use of brownfield sites which would reduce property prices, making homes and business premises more affordable, create more jobs and ease the pressure and costs of urban sprawl.

This was sent to me in an email by Dave Wetzel, Vice Chair, Transport for London

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