David Frost

The core aim of Labour think tanks like Torsten Bell's Resolution Foundation to apply National Insurance to savings and rental income is being accomplished by stealth. But to do it all in one go was seen as too politically difficult, so Labour is increasing the tax rate on this income by 2% a year. In a couple of years they'll have got this supplementary tax rate up to 8%, matching the standard rate of employee NI. But of course the more you tax something, the less you get of it. As the OBR has confirmed this means fewer rental properties and higher rents. It will also mean fewer savings. The OBR noted that the rental income tax hike risks “leading to a steady rise in rents through two effects": “First, potential landlords are less likely to enter the market, reducing long-run rental supply, which risks a steady long-term rise in rents if demand outstrips supply – which we think is more likely than not". “Second, landlords are likely to pass on more of these costs to renters in the long-run through a combination of some current landlords leaving, thereby giving more price setting power to remaining landlords, and greater long-run flexibility to raise rents.” The left hates savers and landlords but the economy needs both of them. It's really sad that the left's prejudice continues to direct Labour budgets. 1/2