My proposal for new taxes !

Now I thought that would get your attention.

Well lets face it we are all - after the bidding war with debt for votes is over - going to have to pay more tax.

Proposal 1: A national mortgage( or debt) tax : The Debt raised should be visibly paid back and calculated for each tax payer. A proportion of income tax should be re-badged as debt repayment tax and at the end of each year all taxpayers should receive a statement of how much they paid of the national debt and how much they paid on interest for it.

After all if its going to take 20 years to pay back then we'd better not forget the mistakes that put us here. This will ensure we never do.

Proposal 2: A general debt tax: Its now clear that debt held by people, banks, and companies involve wider risks to society, which society ultimately underwrites. Therefore there shoudl be a tax on debt (not savings). This would have the advantage of providing HM Govt an income stream which effectively allows taxation of the foreign money that has been dumped then removed from our banking sector. The timing of the tax would have to be after the trough of the coming recession, but its time that the wider damages debt does are recognised in the tax system. ( The same is true of many other economic activities and trade ).

I know how unpopular the idea of raising taxes now is with the right ( who correctly see great scope to cut state waste and reduce its role ) and the left ( who just see more debt as the answer ), but like it or not more tax must be raised.

Why not learn the lessons of the current crisis ?

What about bringing back mortgage tax relief ?

Just had a thought whilst shaving this morning, what about mortgage tax relief ?

The problem is that too many people are defaulting on their mortgages. Currently all the plans seem to bail our the banks at the expense of the people.

What if mortgage tax relief, say on a set amount of the mortgage (as used to be the case ) was used to keep mortgages affordable - stop the defaulting and keep the banks safe ?

I realise there were market distortion reasons for getting rid of it, but if we're going to have to distort the market anyway ?

PS Perhaps Bradford and Bingley will be different to Northern Rock, as we now know the government will stand behind small northern banks. This fact may be enough to prevent to queues outside branches that killed of Northern Rock.

Update: This idea has just been backed by Guido here.