Cover of MoneyWeek magazine issue no 688

Cash crop

25 April 2014 / Issue 688

Profit from the agriculture boom

PLUS:

  • The next recession is nearly upon us
  • Can you profit from the legalisation of marijuana?
  • The Russian tycoon battling the cybercrooks

Excerpt

Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

Buy farms, not flats

Are property taxes too low or too high? A tweet from The Daily Mail’s Becky Barrow reminded me this week to check just how today’s taxes fare against those in the pre-council tax days.

Becky notes stamp duty hasn’t “always been a rip off”. In 1992, it was charged at a mere 1% on all houses sold for more than £30,000. But the thing about taxes in the UK is that there is usually a good amount of give and take.

The UK’s tax take is always knocking around between 33% and 36% of GDP. That’s rather lower than public spending (which is a shame…), but no government has managed to push it any higher, or shown much inclination to allow it to go lower.

So, one way or another, the rise in stamp duty is likely to have been matched by a fall in another property tax.

Which one? It’s pretty much what we used to call rates (the modern equivalent is council tax). Rates, abolished in 1990 after the dismal poll tax experiment, were based on the imputed rent for any given house.

They were both relatively high and much hated: as far back as 1907, British historian George Trevelyan complained that “the rates are one of the highest and the worst taxes under which Englishmen… have ever groaned”. Was it really that bad?

• Read the full editor’s letter here: Buy farms, not flats