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Exchange rate

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If the newspapers are to be believed, the government is planning to scrap 'council tax' in favour of a mixed property/ income tax proposal, which sounds like a messy compromise (or 'third way'). This is being suggested by local government minister Nick Raynsford, normally a safe pair of political hands, and an experienced housing and construction minister in the past. The latest proposal is clearly a way for New Labour to (at last) shove up income tax levels in addition to national insurance etc.

Meddling with property tax systems usually has unexpected consequences; for example, the demise of Mrs Thatcher. The same would be true of this change, which would almost certainly boost housing inflation, since the direct cost of owning the property would fall. Lower property tax equals higher asking prices.

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