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Thinking of joining the Great London Property Rush? Well, apart from the exorbitant prices, foreign investors face another deterrent: A hefty capital gains tax of up to 28 per cent on any future flipping of homes in the U.K., beginning in April, 2015.

The government has finally decided that non-residents should fork over some of their gains when they peddle their overpriced London properties to even wealthier people parking money in the high-flying British market. Russians, Chinese, Saudis and other international players poured more than £7-billion ($12.2-billion) into London real estate last year. London's flood of foreign capital has aptly been called a new, more lucrative version of such safe-haven foreign investments as U.S. Treasuries. The new levy will be on a par with what outsiders have to pay in such other foreign money magnets as New York and Paris.

Chancellor of the Exchequer George Osborne unveiled the tax bite on non-residents in his annual autumn economic statement to Parliament, in which he trumpeted Britain's improved economic and employment numbers, rising government revenues and lower projected borrowing costs. To hear the politician who controls the country's public purse strings tell it, all of this proves that austerity works and this is no time to change course.

Critics contend this is a load of hogwash, or words to that effect. "What matters is whether the economy has been weaker with austerity than without it," eminent economist Martin Wolf commented in his Financial Times column in September. "Little doubt exists over the answer to this question. With interest rates at the zero bound, austerity weakened the economy relative to what might otherwise have happened."

Yet Mr. Osborne stubbornly sticks to his script, in stark contrast to what's been happening elsewhere in the world, as governments intervene to combat the growing threat of deflation and get stumbling economies back on the rails.

Japan has opened the spending taps and is promising to do more. Italy, with the approval of its European overseers, has managed to locate an extra €40-billion ($58.3-billion) to meet payments to government suppliers. And even German Chancellor Angela Merkel, the champion of fiscal restraint who forced debt-ravaged euro-zone partners to swallow a choking austerity diet in exchange for bailouts, has agreed to more stimulus spending and other measures to boost weak domestic consumption.

Mr. Osborne's economic statement shows that he, too, is quietly taking some modest stimulative steps. These include measures aimed at lowering fuel bills, tax breaks for married couples and a reduction in employers' contributions to national insurance. He insists these will be fiscally neutral, thanks to a successful assault on tax cheats and higher bank levies.

The Institute for Fiscal Studies (IFS), which focuses on British tax and public policy issues, has challenged this assumption, estimating the tab for the new measures will run to £2.5-billion, about £1-billion more than the government can expect from its higher tax take. The IFS argues that Mr. Osborne's promise of a budget surplus by 2018, the first this century, would require further deep cuts to public services and welfare spending.

That's despite the fact the British Treasury is raking in billions from the property bubble. Receipts from stamp duties on transactions will be almost £9-billion this year, and the tax take is expected to be close to £17-billion by fiscal 2019.

Stamp duties climb with the value of the properties. Sale prices of up to £250,000 carry a 1-per-cent charge, which would barely get you a broom closet in London.

For the sake of his budget and economic goals, Mr. Osborne needs those Russian oligarchs and Chinese haven hunters to keep spending. Time will tell whether he will tax them out the market.