Don’t Make the Mistake of 1987 Gordon!

Posted by Strangely Freedom Add comments

Nov 242008

I just hope that the leaked plans of tax increases for the “better off” aren’t deferred until some future date as the leaked whispers are saying. The “plan” as it is, is to increase top tax rate to 45% after the next election – or something.

All this will do is fuel a massive rush for those people to either leave the country or shift their money abroad. Whatever the actual value, it’s the signalling of intent that’s the important thing.

This has parallels with 1987-ish when the Tory government made big changes to MIRAS, but deferred them for about half a year. This spurred a huge rush to buy homes under the “old” rules, stoked up house prices way above their true value (a bit like now), and then lead to a huge collapse in those same prices which lead to huge levels of negative equity and thus started the UK recession of the early 1990′s under Major.

None of this would have happened if the tax changes were immediate and swift, just like any normal adjustment to duty on petrol, tobacco and alcohol that people are accustomed to.

There is a live debate at http://news.bbc.co.uk/1/hi/uk_politics/7740897.stm where no-one has spotted this obvious prediction of people’s behaviour.