A tax on high-value property is a long-standing Liberal Democrat ambition, yet one which remains controversial. If and when it is adopted by government, it must be directed locally if it is to address key concerns.
The chief benefit of a mansion tax is to discourage purely speculative housing purchases. Falling demand for luxury property from prospective owners unwilling to pay tax on homes they are not inhabiting would encourage a greater focus from developers on homes affordable to the majority.
Of particular concern is the 70% of newly built homes in central London bought by non-UK residents in 2013. Existing housing stock in an under-supplied market must be used more efficiently. Combined with other new taxes on such property and a strengthening pound, the effect of a targeted mansion tax could be especially strong on ‘non-dom’ owners.
This complements the inherent advantage of a mansion tax. By taxing value arising from features inherent to the property such as its location or design rather than endogenous decision-making by economic agents, it avoids the negative incentive effects associated with income tax.
Speaking on Newsnight on BBC2, Mandelson said he favoured finding new ways of taxing property in Britain. But he added: “I don’t happen to think that the mansion tax is the right policy response to that. I think it’s sort of crude, it’s sort of short-termist.
“What we need is what I think the Liberal Democrats are proposing and that is the introduction of further bands that relate to different values of property within the council tax system. That’s what I would like to see. It will take longer to introduce, that’s true, but it will be more effective and efficient in the longer term than simply clobbering people with a rather sort of crude short term mansion tax.”
Mandelson is the latest senior Labour figure to criticise the party’s plan to impose a tax on properties worth more than £2m to help raise £1.2bn towards the £2.5bn costs of a new “Time to Care” NHS fund. This is designed to support 20,000 more nurses, 8,000 more GPs and 5,000 more care workers by 2020.
The November 2014 AdLib makes interesting reading. Amongst other issues, it set me thinking about the Mansion Tax. It is axiomatic of any decent society that those most able to pay should contribute the greatest amount towards the cost of maintaining it; especially in respect of social costs.
This seems to be an unpopular concept with many on the right of politics, who would presumably see themselves as paying more; while those on the left may be tempted to adopt it as an unthinking mantra, without considering the practical implications. Nevertheless, we must find fair ways of making the better off pay their fair share.
In today’s Times (£), Jeremy Browne slams the Lib Dem plans for a mansion tax:
Plans to introduce an “arbitrary” mansion tax on expensive homes will “undermine the fundamental principles of private ownership”, a former Lib Dem minister has warned.
One of the issues that we heard frequently on the doorstep in Haringey in the run-up to the Council elections was fear over the mansion tax. Many of our wards are in nice leafy areas, where the ridiculous rises in house prices over the last year have left some relatively modest family homes pushing up to the £2m barrier. A retired builder who had bought his home for under £50,000 forty years ago told me that he would never vote for us …
This story appears under the byline of a “Daily Mail Reporter” which is a bit odd, because I don’t think they’ve let any of them into the Cabinet yet, and certainly not any who oppose the Tories. The reference to “my Cabinet colleagues’ kind of gives the game away that it’s our Vince who has taken on Boris over the Mansion Tax. Now, there’s another debate I’d like to see alongside Nick vs Nigel. Vince vs Boris. One day, maybe..
Anyway, Vince started by pointing out that action was taken in the Budget to tax corporate property buying:
One less publicised move was a crackdown on people using high-value property to make easy capital gains from property inflation and then dodge tax, hiding behind a corporate façade.
At a time when families are desperate for housing, thousands of luxury flats sit empty in tower blocks along the Thames. The Government is stopping this abuse by charging a penal rate of stamp duty and a charge on the property value – a mansion tax.
This was the couldn’t-be-clearer headline in the Mirror today, atop an interview with Lib Dem chief secretary to the treasury Danny Alexander:
Defiant Danny Alexander today opened up a fresh rift within the Coalition Government by vowing to block Tory plans for yet another tax cut for the rich. … His comments will enrage Conservative MPs who are pushing to slash the rate from 45p ahead of next year’s General Election. It comes just days after David Cameron refused, on three occasions, to rule out cutting tax. But
Today’s Independent editorial has some heartening words about the approach of Liberal Democrats within the Government and our ongoing policy making process.
The background to the motion on childcare is explored:
Hence the party’s plan to extend free childcare to all one- and two-year-olds, which we report on today, is no well-meaning wishlist, but a battle-hardened piece of legislation-ready policy.
The plan emerges from the struggle between the coalition partners over the last spending round, which was announced by George Osborne, the Chancellor, in June. Nick Clegg pushed for a better childcare deal, but eventually had to concede that NHS, schools and
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.
The 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?
Lib Dem chief secretary to the treasury Danny Alexander has published a robust defence of the Coalition’s welfare reforms in The Sun on Sunday. Here’s how it starts:
Last week a young woman came to talk to me about her housing situation. Her frustration was obvious. She was working hard in a low-paid job and was stuck in an overcrowded home with a young family and desperately needed to move to a bigger home. She couldn’t understand why she had to wait so long to get a home that was the right size for her and her family. It’s a story
This evening, the Liberal Democrats have confirmed they won’t vote for Labour’s mischievous Opposition Day debate on mansion tax, instead tabling a Coalition amendment stating our support for the mansion tax and the Conservatives’ opposition to it. Vince Cable, architect of the mansion tax, has issued a statement explaining why:
This amendment allows Liberal Democrats in Parliament to back our long-held policy of the mansion tax. We created it and will continue to champion it.
The amendment also makes it clear that although we are in coalition with the Conservatives, we have different views on the desirability of a mansion tax.
In today’s Observer, Nick Clegg makes the case once again for a mansion tax to be introduced as the most effective way of spreading the pain of austerity. In fact, he goes a bit further saying it is inevitable:
Victor Hugo observed that it is near impossible to resist an idea once its time has come. Last week, he was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum. … I offer certainty: the mansion tax, or a version of it, will happen. My party has often led the
The Guardian’s Politics Weekly podcast this week focused on the Eastleigh by-election and the mansion tax proposals. These topics were discussed by, amongst others, Lib Dem Voice’s Mark Pack.
Well he has hasn’t he? I mean this ruse to force a vote on the a mansion tax is piece of political genius surely? The Lib Dems will look like fools traipsing through the lobby with the government whilst Labour dangles something that the party in general and Vince in particular has wanted to bring in for years.
Won’t they?
There’s no denying it’s an eye-catching move clearly designed to embarrass the Lib Dems. But of course the party’s MPs will (largely – a few backbenchers may peel off of course) vote with the government on any opposition motion of this nature. …
By Stephen Tall
| Fri 15th February 2013 - 8:00 am
Ed Miliband’s announcement yesterday that Labour will re-introduce a 10p starting rate of income tax paid for through the introduction of Vince Cable’s mansion tax has received a tepid response from the Institute for Fiscal Studies. The IFS put out a note yesterday headed simply, Better options exist to help low earners than 10p tax rate:
A 10p tax rate would reduce taxes for those on low incomes and strengthen their work incentives. A far simpler and more sensible way of achieving these aims would be to spend the same
The Conservative party privately sent letters to Tory donors and wealthy homeowners promising to defeat Liberal Democrat plans for a mansion tax at the same time as their coalition partners thought they were negotiating on a version of the proposal ahead of the autumn statement, it emerged on Friday. … The letters were sent by the Conservative treasurers Lord Fink and Michael Farmer in November, when Lib Dem cabinet ministers privately believed there was hope that the Conservatives would agree to two extra higher-rate council tax bands as a way of raising
On MailOnline Tory MP and ally of George Osborne, Nadhim Zawahi says that his house is worth £5 million and that he would like to pay more tax on it:
Already, thanks to the closure of tax loopholes, the richest in this country will be paying a greater share of tax in every year of this Parliament than in any year of the last Labour Government.
The natural mechanism for raising a mansion tax on high value UK property is not Council tax. Councils lack a home by home market valuation database and the means to build one. HMRC can raise a tax far more effectively and then might distribute it to councils.
Current Conservative policy will block a mansion tax based upon the rich contributing more but might accept a new tax targeted solely at non-owner occupied homes. Not only do these homes
Since 2010 the word ‘fairness’ has been deployed on an industrial scale across the political spectrum.
To want ‘fairness’ is to want a distribution of the spoils which reflects the value of the contribution of each to the economic and social resources of society. A fair tax system should seek to tax according to capacity to pay. It must also act to discourage those, such as polluters, whose economic choices negatively impact on society.
We are not going to have a mansion tax, or a new tax that is a percentage value of people’s properties.
Before you rush to spot the loophole in that – what about adding extra higher bands to Council Tax? – he opposed that too. Given Osborne made much of his reputation as was by opposing changes to inheritance tax, perhaps it is on capital gains tax that there will be room fro an agreement with the …
Earlier in the day, Clegg was repeating his calls for a mansion tax in some form:
Our focus does remain on very high value property for the simple reason that I think most people in this country just don’t understand why people who have very high value properties just don’t pay their fair share, in the way that everybody does.
Danny Alexander has been calling for speedier action to implement social care reforms:
Danny Alexander will warn his Conservative colleagues on Monday not to delay plans to reform social care for the elderly and state pensions, amid Treasury fears that the changes would cost too much.
The Treasury chief secretary plans to use a question-and-answer session at the Liberal Democrat conference in Brighton to insist that the government goes ahead with both the Dilnot reforms and a single-tier state pension, according to officials.
Meanwhile, Vince Cable is winning out in the arguments with the Treasury over creating a new business bank:
Vince Cable reveals £1bn backing for business bank to help small firms…
In what Liberal Democrats are hailing as one of the major announcements of their conference, the business secretary will say that the new bank could leverage up to £10bn to help businesses struggling to find funds from high-street banks…
The Lib Dems say they have had to fight hard to persuade the chancellor to sign up to the bank, which will be funded from “underspends” by Whitehall departments. These are the funds that remain unspent by departments, which are then clawed back by the Treasury.
And here is Ed Davey and colleagues explaining the Green Deal:
Mansion tax is not Land Value Tax, but it is a place to start down the road to shifting a significant part of the tax base from income to wealth.
There seems little argument that mansion tax would be a more effective method of taxing non-resident Non-Doms who acquired over 60% of the properties valued at over £2m in recent times.
The inequalities in wealth in the UK far outstrip inequalities in income. The top 10% of households own more wealth than the rest put together: 0.3 per cent of Britain’s population owns 69 per cent of its land.
Given some of the recent speculation over the 50p tax rate, the speech from Stephen Williams (Co-Chair of the Parliamentary Party Committee on the Treasury) opening the debate on tax policy was significant:
Now is not the right time to drop the 50p tax rate.
The full context left open if there might ever be a right time, but unlike speculation in The Times a few days back, there was no offer of trading off the 50p rate against the introduction of a mansion tax.
His comments also reflected the text of the motion passed, which included:
By Prateek Buch
| Fri 24th February 2012 - 12:09 pm
As part of the long-standing Liberal Democrat commitment to fair taxation, expressed so clearly by David Laws, the party has often called for a greater emphasis on wealth taxes.
As a direct result of these calls, it is now clear that the government is considering some form of wealth taxation to help deliver another long-standing Lib Dem tax policy – giving millions of low- and middle-earners a welcome boost by raising the income tax threshold to £10,000.
The precise nature of increased taxation on wealth is a topic of much discussion. Radio 4’s Today programme carried an interesting discussion of …
By Stephen Tall
| Tue 14th February 2012 - 7:45 am
Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 570 party members responded, and we’re publishing the full results.
81% yes to mansion tax – but pretty even split on £1m or £2m levy value
LDV asked: The ‘mansion tax’ would levy a 1% annual charge on properties above a certain value. Would you support or oppose this new tax?
7% – I support: for houses worth more than £5 million
39% – I support: for houses worth more than £2 million
35% –
Shock! Horror! Lib Dem business secretary Vince Cable advocates Lib Dem manifesto policy!
The Telegraph today reports that Vince’s policy — which would levy a 1% annual charge on all properties valued above £2 million — is still on the table as the Coalition writes its second budget:
Vince Cable, the Liberal Democrat Business Secretary, is pushing for a mansion tax to be introduced on properties worth more than £2million in this year’s Budget. While the policy is likely to be opposed by George Osborne, the Chancellor, Mr Cable said that he had spoken to Conservative MPs who backed the plan.
“A mansion tax is still very much on the agenda – it is a very good idea,” Mr Cable told The Sunday Telegraph. “It is good for two reasons,’’ he said. ”It would constitute a tax on wealth rather than income, which we believe to be right, and also in economic terms it creates the right sort of incentives for the property market.”
Mr Cable added that it was “perverse” that rich “foreigners” could buy expensive properties in Britain and contribute just £1,000 a year in council tax towards the public finances.
3 ways of reading Vince’s comments
There are a couple of ways of interpreting this fresh pitch.
Lib Dem Voice has polled our members-only forum to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 550 party members responded, and we’re currently publishing the full results.
Cut income tax and VAT but raise taxes on property: that’s the message from Liberal Democrat party members in our latest survey. Some answers to our tax questions are unsurprising, such as the North Korean style (or, for older readers, the Albanian style) majority in favour of raising the personal allowance threshold for income tax to £12,500, approximately equivalent to what a …
More economically competent than Labour, fairer than the Conservatives – that’s what many at the top of the party hope the message will be come the next general election. If the economy is not doing well at the time of the next election . However, if it is then the party will need the right combination of economic policies to support that proposition.
That is why people such as Danny Alexander are starting to sketch out possible tax policies for the next general election which will involve giving tax cuts to the least well off, paid for by taxing the richest more.
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.
Causal chains can be very long, with surprising connections between initiating events and final outcomes. Severe violence between protesters and police on the streets of London resulted from the debacle over student fees, broken pledges, and continuing double talk as to whether this is a coalition compromise, or has now somehow magically become best policy. But it has its roots further back in a faulted policy making process in the Lib Dem party. How did an intelligent political party get such policy so wrong less than a year ago, when it already knew all the current economic issues? To understand …
Sonia Brown MBE Violence against women and girls should never be overlooked or normalized. When considering institutional abuse—like that documented in the Catholic Church or...
Noel Hadjimichael It is good to see younger members bringing forward conversations that are challenging. There is no doubt that we are internationalists, progressive and practica...
David Allen Trump's proposals are a fantasy. Egypt will not voluntarily offer Gazans refuge, and Gazans will not voluntarily leave Gaza. However, coercion could work. Si...
John Marriott The 250 word limit meant that I had to omit several sentences which would have illustrated other points I would have liked to have made.
Knowing the area wel...
Ruby Chow Well done and a heartfelt thank you on your good work....
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