Lib Dem ‘mansion tax’: the right policy AND a vote-winner, say 69% of party members

Lib Dem Voice polled our members-only forum recently to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 650 party members have responded, and we’re publishing the full results.

Vince Cable smiling - Some rights reserved by Liberal DemocratsThe Lib Dems are committed to levying a new household tax (known as the Mansion Tax) of 1% on the value of properties over £2m. Which of these statements best represents your own view?

    69% – I support the policy and think it will be a vote-winner

    9% – I support the policy but think it will be a vote-loser

    6% – I do not support the policy and think it will be a vote-loser

    9% – I do not support the policy but think it will be a vote-winner

    6% – Don’t know

When Vince Cable sprang his idea of the ‘mansion tax’ on the Lib Dem conference in 2009 it grabbed the headlines. Three-and-a-half years later, it’s become mainstream, with even Eds Miliband and Balls now backing it. And by the looks of it an overwhelming majority of Lib Dem members are signed-up for it too. If we package up the four-way split here, 78% of Lib Dems support the ‘mansion tax’ and the same proportion think it will be a vote-winner. Here’s a sample of your comments:

We have to show that we are making the wealthy pay more.

Much easier to do this through increasing the number of Council Tax bands. But better still to go over to site value rating.

People will approve of a tax on large expensive property.

I think if all else were equal it would be a vote winner but not with the rabid press we have in this country

Vote loser in leafy Buckinghamshire

Most people seem indifferent to it as it will in reality raise so little if any extra revenue after costs are considered.

A mansion tax would do a lot of good, but significant harm too. Can’t we thing of a better way of taxing those with large incomes without affecting those in expensive (mainly London) properties but who have small incomes? Is it really so hard to apply the collective brain power of our party to devise a fair solution?

I think a property tax might be OK but 1% is too high

It will need very tight presentation to overcome hostile and misleading right wing press statements.

But Labour just shot us. They’ll now claim we voted against it.

Will need expensive revaluing and will be easily avoided by dividing properties

It’s a gimmick, why not just extend Council Tax bands?

However, we must make clear how it will be collected from households which are cash-poor but property-rich (e.g. the elderly). For these it may have to be reconstituted as a death tax.

depends on how the message is got out.

Land Valuation Tax please.

I would rather see this money accruing to local government, which has received such vicious cuts. This would allow for local authorities to set their own upper limits. But I do believe that it is important to charge those who choose to live here but who arrange their affairs so as not to contribute to the common wealth.

council tax might be a better way of capturing this wealth tax, though

but it is oversimplistic. It should be part of a full review of Council Tax, adding additional bands, not just this one. Also adding a band below A, and a ZerO band for anyone in sub-standard accommodation.. BUT we need to re-affirm that when we are in Govt we will remove Council Tax and introduce Local Income Tax.

Will only be a very slight vote winner-there are far more radical and substantial things we should be proposing

but it can’t be done in isolation we need to start explaining why taxing wealth and not economic activity is a good and liberal thing to do otherwise, like everything we do, it seems like something just plucked out of the blue

It’s not a mansion tax. It’s an income tax on people who own mansions. Income tax should be determined by income, not ownership of mansions or any other assets

The sooner we tax wealth as well as income the better. You can’t move a mansion to an overseas tax haven.

First step to Land Value Taxation so it’s great.

  • 1,500 Lib Dem paid-up party members are registered with LibDemVoice.org. 647 responded to the latest survey, which was conducted between 14th and 17th March.
  • Please note: we make no claims that the survey is fully representative of the Lib Dem membership as a whole. However, LibDemVoice.org’s surveys are the largest independent samples of the views of Lib Dem members across the country, and have in the past offered accurate guides to what party members think.
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  • * Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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    12 Comments

    • This is a Liberal Democrat policy to the core and when you also have the opposition now backing it the chance it will become reality increases.

      Imitation is the sincerest form of flattery.

    • Is there any explanation why a high value property tax should not be collected as part of the council tax? Surely this would be the cheapest and most effective way to administer it.

    • Frank Pickard 3rd Apr '13 - 6:37pm

      Sorry but I’m not convinced at all. A wealth tax has to be paid out of income. It is in effect Income tax BUT it transfers the burden from those who actually have the income with which to pay it – on to people who quite often do not. Therefore such individuals cannot pay without selling the asset being taxed. True – the ‘mansion’ cannot be moved abroad but it can be sold and the money removed from the UK. But then who will want to buy such an asset if it comes with annual tax bill? I wouldn’t and the tax avoidant certainly won’t. Values will fall, lucrative stamp duty receipts will tumble, the tax will cost more that it would generate. It’s depressing that in Britain today people equate ‘fairness’ with ‘other people’ paying more tax rather than concentrating on growing the economy.

    • @ tony b

      “This is a Liberal Democrat policy to the core.”

      By that do you mean that it creates perverse incentives and will be unworkable?

    • I do like the omission of a reference to the CPS report on the Mansion Tax ( http://www.cps.org.uk/files/reports/original/120301155110-taxingmansions.pdf ), perhaps because it raises rather too many questions over the viability and effectiveness of the Mansion Tax…

    • Ok, what this says to me is that 31% of lib demmers surveyed don’t actively support the tax. Now when you consider that only 0.05% or thereabouts of the population will actually be affected then that 31% of party members actually looks pretty high doesn’t it? The problem I have with this tax is that it’s plain nasty. It targets a ‘minority’ and uses populist appeal to suggest that minority needs punishing with a really high annual tax that they might not necessarily be able to pay. If it were any other minority then there would be public outcry. It’s time lib demmers changed tack and looked to protect the interests of minorities such as disabled people affected by the bedroom tax rather than terrorising wealthy old people.

    • Richard Shaw 4th Apr '13 - 6:51pm

      @ Frank Pickard

      “Sorry but I’m not convinced at all. A wealth tax has to be paid out of income. It is in effect Income tax BUT it transfers the burden from those who actually have the income with which to pay it – on to people who quite often do not. ”

      Ah the ‘little old lady in a £2m house’ argument. Those with large amounts of wealth have larger incomes, be it in the form of salaries, pensions, rent, shares, etc. That’s how they got their wealth in the first place and how they maintain it, unless they inherited it in which case they would pay inheritance tax (which would be replaced by LVT anyway). If you can’t pay you have to sell – and enjoy all that unearned income gained from the property bubble.

      Suppose I do self-assessment and not PAYE, spent all the money I earned without setting something aside for tax and HMRC came knocking – could I argue I shouldn’t be taxed because I now don’t have the means to pay it without selling assets? I expect I would be given short shrift.

      “But then who will want to buy such an asset if it comes with annual tax bill?”

      Erm, how about road tax?

      “Values will fall”

      Good. House prices are too high. 60% of land wealth is concentrated in the hands of 5% of people – they will have to sell land, or do something productive with it (like build houses). Land and property ownership would become less concentrated and house prices would become more reasonable and less likely to generate bubbles. Infrastructure projects would become self-funding as those that benefit from road or rail projects would pay more tax – and those few who don’t would be compensated by paying less tax.

      “lucrative stamp duty receipts will tumble, the tax will cost more that it would generate.”

      See my point above about more houses, etc. being built and more people being able to buy houses.

      “It’s depressing that in Britain today people equate ‘fairness’ with ‘other people’ paying more tax rather than concentrating on growing the economy.”

      British industries are penalised because most taxes are focused on work and production and not enough on the non-productive sources of wealth , where income comes from doing nothing e.g. from rents, shares, house price increases when no improving works have been done, etc. Moving to asset wealth taxes will make businesses in marginal locations more competitive with those who earn profits by virtue of their location, goods will become cheaper and work more worthwhile. Taxes are also much harder to avoid and developers will no longer be able to artificially inflate property prices or stifle competition by ‘banking’ residential or industrial land for decades without cost to themselves. LVT would enhance the economy not be a burden upon it.

      For more information, I heartily commend the series of pamphlets by Lib Dem ALTER at http://libdemsalter.org.uk/en/page/alter-land-tax-leaflets

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