Wednesday, February 20, 2013

 

Mansion Tax Seems Unecessary

Sorry not to have posted for over a week but I have been to Paris for a long weekend to celebrate my wife, Carolyn's 60th birthday. Looking at the occasional estate agent's window it was obvious Paris is full of top value real estate.  Which brings up the issue of the 'Mansion Tax'.. Originally the brainchild of Vince Cable it was dismissed by Osborne as likely to infuriate the Conservative constituency of rich or wannabe rich homeowners.  Ed Balls however said he liked it in September 2012 and this month the other Ed has suggested it might get into Labour's manifesto for 2015.

Simon Jenkins, always a bit of an unusual columnist, writes a clear and sensible critique of the proposal in The Guardian. He points out that there are only 74,000 houses worth over £2m and that the tax would yield only £1.7bn a year. A much better approach would be to increase the number of Council tax bands for houses worth between £1m and £2m: likely to produce more revenue and preclude the need for more legislation and political fights with those admittedly rich home owners who would have to find unreasonably large annual sums to meet the tax's requirements.

"If politicians really want a more progressive local property tax, there is no problem. They should use the one they already have: council tax. The Welsh introduced an upper I band in 2005, with no revolution of the rich. England could be given half a dozen extra bands above the H-band threshold of £1m, capped at 0.5% of value. It would be less penal on the lower bands than mansion tax, would spread the burden and raise far more money."

What's wrong with that alternative? Nothing that I can see. But I'm very doubtful anything like a 'mansion tax' is ever likely to happen in this country: Osborne hates it, Tory voters hate it and it would mark a shift into a completely new way of taxing the British: a wealth tax. 



Comments:
Minor point of pedantry Skipper - it would be an asset tax, not a wealth tax.

Moreover, such an idea is not new - it goes way back to the dim and distant mists of feudal rapacity. Think of Domesday, think of the grievances listed in Magna Carta, or remember Parliament's right in the Lancastrian era to raise taxes upon a lawful fifteenth of all moveable goods.

In fact, the idea of taxation being primarily based on income is a very twentieth century idea. And of course, we're not in the twentieth century now.

I think that the proposed mansion tax would be a shambles given the wide disparity of house prices in the country. But your idea of extra council tax bands sounds interesting. How about local variations though - e.g. should a family in a small three bed in Richmond worth £500,000 really pay the same amount of tax as somebody with a five bedroom detached house with large garden in Cumbria?
 
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