MPC Member calls for Property Prices to be curbed by a Property Tax

A member of the Bank of England's Monetary Policy Committee (MPC) wants to see a new property tax introduced in order to curb property price booms occurring, and help prevent the recent economic slump occurring again.

Adam Posen, an external member of the MPC, has recommended that new tools are necessary to prevent the boom and bust witnessed in the UK property market in recent years.

He believes that fiscal tools rather than monetary policy tools, which includes interest rates, are necessary to control property prices, and prevent them spiraling out of control.

Posen told the press: “The bottom-line for monetary policy coming out of the crisis is, if you have a financial problem, use financial policy tools to fix it.”

“That applies to bubbles, which means monetary policy should not be targeting asset prices as well as inflation.”

If Posen, who joined the MPC as an external member in September, had his proposals approved, it would mean a radical change to the UK housing market and potential fluctuation in prices.

source: www.whathouse.co.uk