“Lib Dems declare war on rich” is the hyperbolic front page of today’s Independent.
It’s tagged ‘exclusive’ though the article – which you can read here – seems to be reporting Lib Dem policy as approved by the party’s September 2013 conference – namely: (1) Introduce a Mansion Tax, applicable at 1% on the value of a residential property in excess of £2 million; and (2) Cap the lifetime limit for which tax relief is available on pension contributions at £1 million. (Flick to page 3 of the party’s ‘Fairer Taxes’ policy paper.)
Still, there are quotes from a “senior Lib Dem figure”, which highlight the dividing lines between the Lib Dems and the Conservatives of which we’ll be hearing much more in the next 15 months:
A senior Liberal Democrat figure told The Independent that the party did not think it was “fair or sensible” to go into the next election promising to cut the budget deficit solely with spending cuts.
“This is about showing that we have fully costed plans to reduce the deficit by a more equitable distribution between spending cuts and tax rises,” the source said.
“The Treasury has already looked in great detail at how you would make a mansion tax work in practice. Danny is going to be able to use the Treasury papers to make that case. We’re looking at pension tax relief. The lifetime allowance is now £1.25m. We’d like to see that coming down to £1m.”
Another Liberal Democrat source added: “We have always been clear that those with the broadest shoulders should bear the greatest burden.”
Anyway, enough cavilling about whether any of this is news – after the past fortnight, it’s good to see the Lib Dems back on the front pages for putting forward policies.
* 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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11 Comments
Shame it’s taken them 4 months to get halfway down page 1 of the executive summary. There’s a lot of good stuff below that like Land Value Taxation, Accessions Tax, and aligning Capital Gains Tax to Income Tax.
Why stick with the mansion tax.
The amount of money it will raise will be small, it will cause huge butthurt, it has little popular support, and it will enevitably cause stories of the little widow living in big house being charged for money she doesnt have (even if the story ends up being false).
Bad policy, bad politics.
we don’t do war – this is aggressive diplomacy
The Lib Dem tax policy until 2015 is what the Conservatives will go along with. So it’s basically it’s what George Osborne agrees to and nothing else.
For this to become the Lib Dem tax policy in 2015 then they would have to enter into coalition with a Labour government after the next general election, since only a Labour government would be prepared to implement them. Indeed Labour would be likely to do so regardless of whether or not the Lib Dems were part of a coalition. And since the Lib Dems aren’t prepared to make that commitment, they can’t claim that those policies will be implemented should they find themselves in government again. Which makes such policies pretty meaningless, really.
Look at the fate of policies on which the Lib Dems campaigned in 2010, such as their warnings against premature austerity and opposition to tuition fees. Why should anyone believe the fiscal measures in a Lib Dem manifesto again? And furthermore, were the Lib Dems serious about the need to implement these policies, they would have ended the coalition long ago and forced a new election by opposing any replacement government on a vote of confidence.
Under the fixed term parliament act you need to get around 60% of MPs to agree an early election. Not achievable.
It’s news to the extent that the Indie seem to have been told it will be in our manifesto. Most of us could probably have guessed this. But it is fair to point out that most policies we have adopted will not appear in the manifesto, not for any particularly conspiratorial reason, but to keep our proposed programme moderately short and affordable.
With respect,I have made the point before that any proposal for a “Mansion” tax is just plain barking. What is needed,as a matter of some urgency is a rational revaluation of all property for council tax purposes, with a much extended number of valuation bands. The current band “D” is the mid point between the two extremes, and is totally unreal. The upper limit should be set at something like £ 750.000, with a graded surcharge on anything above that. The midpoint valuation should be somewhere in the region of £ 275.000 , comparable to the present band “D”. Furthermore, all valuations need to be reviewed every five years, and furthermore reset on the sale of any property,to reflect the true valuation of the property on the change of ownership. As things stand, the system is totally unfair to all and sundry, with the lower valued property carrying too higher burden of the Council Tax take.
I tend to regard Mansion Tax as an interim measure, to hold the fort until a full property tax reform is implemented. The deficiencies of the present council tax are well known; there has been no revaluation and property prices have vastly out-stripped the bands set up two decades ago. Some of this is down to the quick fix when it was introduced and the indolence and cowardice of successive government avoiding do ing the essential maintenance on the system.
Such experience suggests that it will be some time before the issue is resolved on a sustainable basis. Thus the Mansion Tax as an interim solution is worth doing.
Ian: As an interim measure,the Mansion Tax might be feasible, but it will depend upon when the start level kicks in ! It will have to be in the region of £ 800.000 to generate any real income for our local authorities to squander.
The liberal democrats have declared war on the rich, or so it seems according to the newspaper reports after they announced proposals to raise a “mansion tax” and to reduce (again) the pension lifetime allowance. But isn’t the labour proposal to increase again the top tax rate back to 50%, after the conservatives and liberals reduced it to 45%, more logical? The top rate of tax applies uniformly to all income above a certain threshold: seems more logical and fairer than a “mansion tax”. Why rich people buying a mansion in the UK should be taxed more than those who choose to buy a yacht or a mansion in France?
Now that Labour has proposed to increase the top tax rate to 50%, would it not be time to eliminate the higher tax rate of 60% that applies to individuals on lower income? A notorious anomaly of the loss of the personal allowance, for those earning more than £ 100,000, is that they actually pay the equivalent of a 60% tax rate which is much higher than the 45% currently applied to those earning more than £ 150,000.
As for the reduction of the pension lifetime allowance, it is again misguided: pension contributions have so far being completely exempt from taxation because they encourage saving towards a pension and defer spending. Those who accumulate higher pension savings will always be taxed at a higher rate, when they start receiving their pension. A number of reports have shown that many individuals, including many on middle or high incomes, do not save enough for their pension and, as a country, we have one of the highest external (public and private) debt. Should we not do more to encourage saving, including saving in pension schemes? The likely consequence of a lowering of the lifetime allowance will be more professionals retiring earlier than planned, as soon as they hit the allowance, and this goes very much against the strategy of encouraging all of us to work until later in life. Increasing the progressive tax rates is the simplest and fairest way to increase taxation but some politicians much prefer hidden or disguised tax increases, whatever the consequences.
We live with the anomaly of being charged 60% tax on £100000 salary as mentioned above. We receive no child benefit as I stay at home to look after kids, 2 earning our equivalent would still qualify, would receive 2 personal allowances and not be charged same tax rate. My husband can only contribute tax he does because I don’t work. No values placed on family units anymore and people like us being made to bear brunt. What we finally get in hand isn’t far off many on full benefits once you take off travel to work,national insurance etc and all for the pleasure of working 70 hour week.