In ‘Why Wealth can’t be Taxed’ it was alleged that a mansion tax is illiberal. However, as a liberal, I am concerned for the state of the property market in the UK. The average age of the first time buyer is now 35.
Housing is a policy that has been forgotten, with health and education becoming the areas of priority. However as liberals, we can address the state of housing through taxation, for I would say that ‘land is theft’. There is too much concentration of power in the hands of the few. Land Value Taxation is a key to addressing this.
“… [s]hould replace some existing taxes. It should not add to the overall tax burden, its purpose is to shift tax away from income taxes.”
Our 2010 General Election manifesto stated that our pre-election pledge to increase the income tax personal allowance threshold to £10,000 should be paid for via, among other things, a Mansion Tax. Now, I accept and am proud that the Liberal Democrats are the party of fairness, but my worry is this: is an increase in the income tax threshold enough to show that we really are the party of fair tax as we approach the 2015 General Election? Our tax policy not only needs to have a long-term goal, we also need a short-term strategic plan. If we are to be the party of fair tax, I suggest that we:
- offer a more radical alternative to the accepted tax arrangements in this country;
- offer an alternative that is acceptable to centre-left leaning voters (a lot of whom we have lost since 2010); and
- to be practical – by offering a Land Value Tax, we have a Mansion Tax to fall back on.
I accept that we have made some progress with, for example, a rise in Stamp Duty. Stephen Williams MP, chairman of the Liberal Democrat backbench committee for Treasury matters, has also been calling for the implementation of a full Mansion Tax. Yet during the Chancellor’s Autumn Statement, George Osborne said he “won’t introduce a new tax on property.” The stumbling block has not been our ability to voice our concerns over the issue (there is even a campaign, which you can join here) but of our lack of overall vision for how our tax policy joins up. If we had started negotiations with what we really wanted, then we would always have a poker hand left to play.
A Land Value Tax offers our party a more coherent approach to our taxation policy, as well as an area where we can join with the Labour Party. Those in the Labour Party are already contemplating the tax and it could very well be a key plank of any Coalition talks with the centre-left. Of course, the Labour Party had 13 years to implement such a reform so we must be cautious. Nevertheless, I welcome this opportunity. In a time of austerity and when our campaigners will be met with questions of ‘what have we done for the poor?’, a Land Value Tax would be a credible answer, for it offers both tax fairness and social justice.
But we must go even further than proposals for a Mansion Tax in any future coalition negotiations and commit ourselves to a Land Value Tax.
* Alex Smethurst is a Parliamentary Assistant and Treasurer of City of Bristol Liberal Democrats (written in a personal capacity).