Alice in Wonderland
I see that the Minister of State at the Home Office, Miss Alice Bacon, has been sounding off in the Hull by-election about the iniquity of the rule that allows mortgage interest to be a deduc- tion for income tax purposes. According to Miss Bacon this is nothing but a subsidy for the rich. . Dear Alice is such a nice, kind, motherly creature that I hate to have to disabuse her; but it really isn't so. If you increase your income by lending. money, you're taxed on the interest you get, and if your income is reduced because you borrow money, you get tax relief on the interest you pay. The two sides have to cancel out. It's as simple as that.
Nor is it possible to separate mortgage pay- ments from other interest. That is, not unless you want to discriminate against the ordinary home- buyer while leaving untouched the really rich man who can borrow against the security of his stock exchange investment. But Alice does have a point, although it's not the one she thinks it is. The real illogicality in the system stems from Selwyn Lloyd's abolition of Schedule A, so that a man now gets tax relief on the interest on a loan to buy his house, without paying any tax on the notional income from that house. So, Alice, if you really want to make an issue out of the tax treatment of home ownership, you should be campaigning for the reintroduction of Schedule A. Try that on the electors of Hull.
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