Taxation and Subsidies

Abstract

In the preceding chapters we have seen how various policies assist different tenure groups within the housing market. For example, rent control reduces the rent that the private tenant has to pay below its free market level; tax relief on mortgage interest payments increases the disposable income of many home owners; and LA charging practices result in lower rents for council tenants than would prevail in a free market. Not surprisingly, one of the most persistent debates surrounding this area of government activity concerns the overall distributional consequences of these policies. Specifically, what are the relative benefits accruing to owner-occupiers, private tenants and LA tenants as a result of the combined effect of these taxes and subsidies? And to what extent can the pattern of assistance be considered equitable?