A Brussels proposal to tax homes at 20 per cent shows how little the EU has learned from the recent crisis, claims UKIP MEP Godfrey Bloom on Public Service Europe
•I was sitting next to a leading Yorkshire businessman last year at a Beverley racecourse lunch, in England. He was the chief executive of a caravan and mobile home manufacturer, big business in East Yorkshire. Value added tax had recently been raised to 20 per cent, it had dealt an almost killer blow to his company and he explained why. It is interesting insofar as it demonstrates the problem VAT gives to the end user or perhaps victim.
Apparently, and I know nothing of caravans thank god, I am a car and credit card traveller; this was the impact. Caravan folk, those who block the A66 when you are trying to get to the Lake District, replace their caravans on average every seven years. The usual middle England three berth 'golden whammer' or whatever costs about £15,000. And VAT at 20 per cent simply killed the 'up trade'. People are simply making do. The result is the factory is on a three-day week; it has been now for 18 months.
A caravan is a luxury leisure item; it is the first consumer durable to bite the dust. We have a monstrous national debt here in the United Kingdom, nearly £80,000 per taxpayer, one of the highest in an industrial democracy. If you check the numbers on the British HM Treasury website, you will see this is worse than Spain and Italy. Nobody is yet talking about it as all eyes are focused on Greece and the Iberian Peninsula. The UK is the next crisis economy, as both deficit and national debt are increasing - not decreasing as is popularly believed. I am a bit of a freak politician because I know the difference between debt and deficit.
No matter, back to VAT on caravans - all right wait a minute I am getting to houses - what was the result of this hike? Well of course the government gains less revenue. All the workers on three days pay less tax, fewer insurance stamps, less excise duty on their booze, fags and fuel. Lord knows how much is lost in surrounding support industries and corporation tax. The same happens if VAT is applied of course to anything. Houses are bought mainly on mortgage. A multiple of income, a 20 per cent price increase kills the purchase stone dead.
Anyone who has searched for the house of their dreams will understand another 20 per cent might as well be the moon. You can either afford it or not. The price increase will immediately amortize itself across all domestic property. The whole infrastructure starts to collapse under the weight of tax. The economy stalls; recession goes into depression, unemployment soars, especially youth unemployment already at 50 per cent in many European countries and nearly 30 per cent in the UK. Government spending is already at 50 per cent of gross domestic product; unsustainable in any modern industrial economy, the march to the centralised soviet style state accelerates and becomes unstoppable.
Politicians and civil servants must learn a basic economic lesson, there are only two kinds of citizens. Those who create wealth and those who consume it. Governments can only tax, borrow or print money, all paths lead to destitution as history shows us. We must cut taxes drastically and return to hard money. I was in the European Parliament only last week and the authorities have now erected barbed wire around it. Nobody is talking about it, we pick our way through a gap. With central banks now buying gold and the need for barbed wire we know we are nearing the end game.
It may be we must see a complete collapse of the post-war corporate and social welfare state and Weimar Republic inflation before we can build again on libertarian small government principles. A Brussels proposal to tax homes at 20 per cent shows how little they have learned from the recent crisis, I suspect barbed wire will not be enough to save them when youth unemployment hits 60 or 70 per cent.
Godfrey Bloom is a UKIP MEP for Yorkshire & North Lincolnshire, in Britain