In other news… Son of mansion tax, Tory councillor switches to Lib Dems and more

Nick Clegg has been telling the Financial Times how he would like to see taxes introduced for the most expensive properties as part of any removal of the temporary 50p top rate of income tax. Son of Mansion Tax here we come…

Jonathan Calder reports on the latest goings on in the lively world of Leicester politics, including Conservative Councillor Nigel Porter resigning from his party and deciding to fight his ward for the Liberal Democrats in May’s elections.

The Yes to Fairer Votes campaign has published details of its donors and challenged the No campaign to show the same level of transparency.

Finally, at the weekend The Observer reported,

The government’s flagship plan to cap benefits at £500 a week per family has been thrown into crisis after the Liberal Democrats broke coalition ranks to complain that the policy risks increasing child poverty and homelessness.

In a move that suggests a more assertive approach by Nick Clegg’s party, the Lib Dems have joined forces with leading charities and senior figures in local government to argue that a rigid cap could have a disastrous effect on families living in areas where the cost of housing is highest.

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13 Comments

  • This would be a massive win for party if this happens. It would transfer the tax burden from working to non working people. I spent a long while arguing this on the doorstep last April and it was popular. If this happens it could be the base of a differentiation from the Conservatives since this is absolutely not a Conservative policy. I do not believe that this will happen because there are people in the Conservative party who understand just how important it is and they will lean on Cameron. If this happens it will be the start of Georgist policies and these will be popular and could help a resurgence of our fortunes as a party.

    Ed Joyce

  • I’d dispute the fairness of abolishing the 50p tax rate and taxing ‘mansions’ – why not do both? But it doesn’t matter anyway, it seems it was another instance of Cable mouthing off about somehting he has no influence over, as the Treasury make absolutely, and humiliatingly, clear.
    http://www.dailymail.co.uk/news/article-1370970/Treasury-rejects-Vince-Cables-plan-mansion-tax.html

    Nick Clegg seems clueless too.

  • @ g

    Agreed.

    It should be up to us Lib Dems to be just as dismissive about ending the 50p rate.

    Why shouldn’t we be rubbishing the Tories’ ideas as ‘loony’?

  • Abolish the 50p tax and the Liberal Democrats will be seen as the true creatures of the Conservatives. Keep the 50p tax and insist on implementing the mansion tax and you could restore some of your lost popularity. Go on, get the Tories to do something you want for a change!

  • Andrew Duffield 29th Mar '11 - 9:38am

    “I’d dispute the fairness of abolishing the 50p tax rate and taxing ‘mansions’ – why not do both?”

    Because we need to shift the burden off productivity and onto unearned wealth. Taxing productive work is patently unfair. Its deadweight burden is passed on in the cost of goods and services – with greatest incidence on the poor.

    Clegg’s/Cable’s proposals would be a sound, redistributive step in a Liberal Economic direction. More please!

  • @Andrew Duffield

    I have some sympathy with the position that productivity should be taxed less than unearned wealth. However, what is the effect of income tax on the costs of goods and services? It’s not a tax on the business that produces these things, it doesn’t diminish their capital, so it’s not an expense the business has to pass on.

    You also need to challenge accusations of unfairness, VAT, as we all know, has a great effect the less you earn. Cutting the 50p rate and increasing VAT is, de facto, a tax cut for the rich, and tax rises for the poor. Unexpected behaviour from a Tory government, but is it liberal?

    But, nevertheless, decreasing the accumulation of unearned wealth is no bad thing. So why don’t you increase, rather than cut, inheritance tax and abolish the dodges associated with the transferal of wealth between generations of the same family?

  • Andrew Duffield 29th Mar '11 - 11:19am

    @g

    “…what is the effect of income tax on the costs of goods and services? It’s not a tax on the business that produces these things, it doesn’t diminish their capital, so it’s not an expense the business has to pass on.”

    Yes it is.
    Labour is a cost to business. Taxing labour (via income tax, NI or VAT) adds to that cost. Businesses pass on costs to consumers. Ergo, taxing jobs reduces employment and adds to consumer costs – a double whammy for the poor.

    Personally, I’d rather see a tax shift that raises the income tax threshold further – making it cheaper to employ low earners. But if scrapping the 50p rate helps to sell the principle of taxing unearned wealth to the Tories, I’m all in favour.

  • @Andrew Duffield.

    Presumably you have some figures to support your proposition? What was the amount of tax levied by HMRC on earned income in the last financial year for which there are figures? How does that compare to the potential tax yield per year available on unearned income? What would the criteria be for determining unearned income. Increasing house prices? Would one get a refund if house prices fell? Your suggestion also predicates the removal of VAT. That tax yield would also have to be put into the mix. Seems to me that your proposal would provide a wonderful opportunity for even more tax avoidance. Frankly, tosh.

  • Andrew Duffield 29th Mar '11 - 7:38pm

    @MacK

    Tish.

    A sane and sustainable UK economy would raise the £300 bn / year that HMRC requires by taxing land values rather than the value added by work and wealth creation. Dividing this figure by the total area of developed land (commercial and domestic) from the Generalised Land Use Database (scaled up for the whole UK) – and exempting a sixth, say, for pensioners main homes etc – you get a median figure of around £23 / sq. yd / year.

    If the state collected that in lieu of all our current deadweight taxes on income, enterprise and trade we would have far more winners than losers – particularly the young and the poor – not to mention a far freer and more prosperous Britain. Clegg & Cable’s suggestion marks a tentative first step towards that genuinely Liberal goal.

  • Andrew,

    I fully agree with your comments. As you say this is a genuinely liberal goal. This policy shows a clear difference between our party and the Conservatives. We are looking for these type of policies – we need differentiation. Also it was our policy at the election. Land taxes are a known to be a difficult tax to avoid – that’s one of the reasons landowners oppose them so strongly. Workers suffer from the failur to tax land because they are taxed on their work as well as on the costs of getting to work, plus the cost of goods (ie VAT) being higher in areas where work is plentiful. We need to shift the tax burden from workers to non workers. This would give a supply side boost to our economy.

    I am not clear which side MacK is on. There are two apparently opposing comments

    insist on implementing the mansion tax and you could restore some of your lost popularity. Go on, get the Tories to do something you want for a change!

    later he says

    Seems to me that your proposal would provide a wonderful opportunity for even more tax avoidance. Frankly, tosh.

    We should see which of these views is to be withdrawn before taking up cudgels – he might be an ally (or at least provide a coherent opposing view which will help to show what we are up against)

    Ed

  • @ Andrew Duffield and Ed Joyce

    Ah, you’re talking about a land Value Tax. Well, why didn’t you say so? “A tax on unearned income” is the concept that I was reflecting on. Far too nebulous for an old proletarian such as myself. I thought you were wrestling with Marx’s old proposition of surplus value and we all know what trouble that caused him. Establishing criteria for “unearned income” would be a problem which would produce all sorts of anomalies, but partially taxing land is a good idea which I could support. Hence my approval for the Mansion Tax. Andy Burnham too has signalled his support for a Land Value Tax, in a recent Guardian article. However, given Labour’s previous problems with a Land Value Tax, advocating that all taxation be superceded by it iswould probably not such a good idea politically. Hence why I would wish to keep the 50p tax for the present. The public might also take some persuading that a Land Value Tax would raise sufficient revenue and I’m sure that the vested Land interests that support more elastic forms of taxation (and therefore avoidable ) would damn it to hell.

  • Philip Young 30th Mar '11 - 9:03pm

    Todays Telegraph says the Treasury civil service has costed a reform of local council rates at 260 million, and then quote numerous Tories as saying its a red line that cant be crossed, and a mansion tax is a non-starter.

  • That’s the issue, a red line for the Conservatives, a popular policy for us. Let’s take the initiative and differentiate ourselves.

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