Thank you, IMF — another tax is just what we need
The economics boffins at the International Monetary Fund (IMF) have had a wizard idea for Britain. Yes, it’s a wealth tax! From their Washington DC fastness, they have noticed how the baby boomers have cleaned up in the property business, so it’s payback time for all those gains from sitting in your house.
Never mind that UK taxes are already the highest they have been in half a century, the IMF country report recommends “targeting those taxpayers who have benefitted most from the pandemic…. This could be done by raising windfall or wealth taxes now and pre-announcing subsidies for future green investment (e.g. VAT cuts), and/or by incentivising savings accounts for future green spending.”
Sadly, the IMF doesn’t deal in trivial detail, so there is no indication of how a wealth tax would actually work, let alone how to persuade the lucky homeowners that not all the gain is due to their brilliant foresight, or to calculate how much they might give up to the taxman. The IMF is also unburdened by any need to seek re-election.
In fact, much of the 90-page report (plus appendices and a smug comment from the UK government) is a statement of the bleedin’ obvious, larded in speciality deathless prose: “[IMF] staff argued that fiscal policy should retain an important role in responding to the present conjuncture.” “The macroeconomic landscape is likely to continue to be volatile going forward.” “Fiscal policy has a key role to play in addressing volatility through automatic stabilizers.”
It is a very long time since Denis Healey was called back from Heathrow as he was about to depart for Washington and the IMF conference, having instead to ask for a bailout for the UK economy. If it did not exist, there would be pressure to invent an international monetary fund today, but we would be grateful if executives at the current one learned to write English, and considered the privileges and perks that come up with their rations before calling for an additional burden on UK taxpayers.
On the buses
Just in time for the Queen’s jubilee extravaganza, Crossrail is going to start running trains. No, honestly, this time it really is, or so we’re told. Renamed the Elizabeth Line, it’s a showcase of British engineering, taking passengers from Reading, under London, and out to deepest Essex. A couple of decades in the making, late and, at £19bn, the traditional miles over budget, it remains to be seen whether anyone will use it.
Of course some hardy souls will want to go direct from Shenfield to Heathrow, or Reading to Canary Wharf, but the numbers will be far below the traffic projections which underpinned the decision to proceed. If this is true of the Elizabeth Line, it’s true in spades, diggers and boring machines for the wretched HS2, that transport vanity project to end all vanity projects.
Conceived in a pre-internet world that has gone, the cost has passed £100bn, while the line itself may never get past Birmingham. Even if fares are set at levels that only travellers using other people’s money can afford, it will never cover its running costs. It is a perpetual multi-billion pound money sink.
Compare and contrast, as they say in all the best textbooks, the pittance being promised to keep the nation’s inadequate local bus services running. With great fanfare, when Grant Shapps wasn’t promising to cull the patronising announcements that blight train journeys, his boss made his own patronising announcement, of £3bn to Bus Back Better.
As usual with this mendacious administration, the reality is far short even of that modest number. The grant has been quietly cut back to below £2bn, even including some emergency support grants during the pandemic. As a result, bus operators from Manchester to the West Midlands and Tyne and Wear are now planning to scrap some services, and impose cuts of up to 30 per cent in others. Cutting back a service courts financial disaster, since if 31 per cent of passengers decide the wait in the Manchester rain is just too long, the loss is increased, reinforcing the vicious circle that ends in scrapping the service completely.
The contrast between disappearing buses on one hand and the waste of HS2 plus the extravagance of the Elizabeth Line on the other could hardly be more stark. The future of bus services, with the reassurance to to users planning their lives, could be guaranteed with a few percent of the money saved (even now) from scrapping HS2. Buses offer flexibility and frequency that rail services can never match, but as long as they are seen as somehow only for poor people, this government will ensure they stay that way.
With Jonathan Ford, I have launched a Podcast, A Long Time In Finance, every Friday on Spotify or the Apple app. At 20 minutes, it is not really a long time for you to spend in finance.