Skinflint's City Diary
Anyone of open, logical and analytical bent is led to make deductive suggestions towards economic and fiscal reform. My own measure is called the Freehold Redemption Act, discussed in this column on October 14, on which I have had further thoughts — some prompted by correspondents' letters.
Briefly my proposal was intended to be a means of seeking a way out of the frightening estate duty, capital gains and possible wealth tax hazards that leave most family businesses and their workers quite literally one heartbeat from bankruptcy and liquidation. Inflation and rising property values have brought most householders and small traders within the estate duty net. The raising of the estate duty threshold limit is a palliative, but the continuing worry for all business men, leaving many and their capital in a state of commercial immobility, is the threat of confiscatory tax. Further the inadequate time scale of annual budget conjecture makes it difficult to safeguard business capital at the same time as making it sound and commercially aggressive.
The Freehold Redemption Act would remove by statute an owner's freehold interest in land and buildings but immediately substitute a free 100-year leasehold interest vested in him by the State. To inhibit repeal and change of term the State should pay t'he small difference
between the freehold and leasehold interest at the time of the initial legislation.
Conceding that land and buildings in this country of sixty million acres must now be worth in excess of £200,000 million — the Department of Applied Economics at Cambridge estimated the country to be worth £139,500 million in 1966 -means a notional reversion to the State of £2,000 million each year. During the early years of the new legislation a Ministry of Land — probably a part of the Treasury — would be at liberty to issue Government Bonds, possibly internationally, against the reversionary values accruing to them. This Ministry of Land would be redeeming, dealing in and releasing property, discounting the future as it suited them.
Freehold redemption, I suggested, would produce social correction utterly equitably and a proper time scale as well as raising more revenue than any capital, wealth or estate duty envisaged outside a Bolshevik state. The constraint through the notional deflation of property values, at constant prices, during the expiry period of leases would adjust the wage-price inflation deliberately induced in a post-Keynesian world.
It is scarcely necessary to say that every soul in the land would be making his contribution.
To t'he humblest it would be some tiny proportion of the cost of say, a tin of food that represents a minute fraction of the annual redemption of the manufacturer's factory and the land on which it was originally grown. It would remove the hard concrete suspicions, held by many of us, that estate duty is a voluntary tax to those families rich enough, long-lived enough or clever enough to have produced such stratagems as discretionary trusts, charitable trusts and insurance schemes which the Chancellor continually battles to stop.
It is time Conservatives allowed themselves the free heresy of open minds to consider plans that should, allow the entrepeneur free rein by ridding him of the fear of sudden confiscation at the same time as allowing to revert to the state that power which should give them the opportunity for grand environmental change. The union of capitalist sagacity with socialist refinement should be a start. But Keynes warned in 1925:
The Conservative Party ought to be concerning itself with evolving a Version of individualistic capitalism adapted to the progressive change of circumstances. The difficulty is that the capitalist leaders in the City and Parliament are incapable of distinguishing novel measures for safeguarding capitalism from what theY call Bolshevism,
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