The Lib Dems mansion tax is, let's be honest, a Lib Dem bodge.
It's a simple tack on to council tax.
It's crude.
The evidence base for valuation is going to be very marginal in many cases. And volatile. Perversely, many properties supposedly worth just over £2 million will rapidly fall in value by well over £100,000 the moment a tax was introduced.
And the all or nothingness of the threshold has inherent within it a massive core of injustice. After all, why should someone in a £1.9 million property pay band H council tax and someone in a £2.1 million property pay £21,000 extra?
The only thing that is not a problem with it is 'the little old lady problem' - the tax due by pensioners will simply be rolled up until death. That's not an issue. Although it's odd how the Tories are coming out in force to defend their own when they have just passed a law making it illegal for a person to live in a property with a spare bedroom - and compelling people to move if they do. The rank hypocrisy is staggering.
So let's not pretend the mansion tax is a viable proposition: it's not. It's a ghastly compromise, with a threshold arbitrarily increased from £1 million a while ago to prevent Bromley going up in flames as the middle classes rioted in protest, which is neither a council tax, a land value tax or even an answer to the horrible deficiencies in local taxation in the UK generally, which is a whole area in need of massive reform given that the council tax we have was the hastily cobbled together answer to the disastrous poll tax. That council tax has long outlived its suitability for purpose.
Is the mansion tax an answer to the 50p debate, therefore? No, of course it's not. We need that 50p tax rate to create a progressive tax system.
Just as we need a land value tax.
And a local income tax one day, maybe.
A proper wealth tax should also be on the agenda.
And lowering the thresholds for inheritance tax so it was payable by many more people is very obviously essential.
But a random mansion tax? No way. This has no merit whatsoever. So can we end that debate now, please?
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“someone in a £2.1 million property pay £21,000 extra?”
Erm, isn’t the plan to pay on the value over £2m? So a person at £2.1m would pay £1000 extra?
If so, I’ll accept you word
That is not how it is being reported
Noel is correct; that’s always been the Lib Dem proposal (see the manifesto).
Apologies then
In which case it’s an even more useless fiasco
I believe Noel is right.
Slightly odd that you respond to the neutering of your main criticism of the proposal by saying that that means “it’s an even more useless fiasco”.
Why, without your criticism of the “cliff-edge” problem, do you still say it’s a bad idea?
Because we’d now abandon a seriously revenue raising tax for a non-entity tax
An even bigger bodge
Hi Richard, one easy way to take the old lady issue out of this would be to frame the tax as charged on any property purchased for more than £2million since say 1990. It should be easy to establish from Land Registry records where these properties are. How much would be lost in doing it this way rather than by value should be easy to determine and could be compensated for by putting up the rate.
It would also have the virtue of particularly bashing those rich foreigners who have been driving up prices. Should be easy to cut through all the offshore corporate veil tax have bs by seizing the properties of non compliers and auctioning them off.
And what exactly do you mean by a wealth tax – that is likely to be fraught with the same problems of a mansion tax.
And we dont need a local income tax – the complications of the national system are more than enough for the average person to deal with without having to deal with a local tax.
This is a form of wealth tax, is it not? Britain’s housing stock is part of its wealth. It seems unfair to me people should be taxed on their wealth because wealth is not money. If you’re going to be taxed on wealth it seems to me to be a disincentive to gather any, surely not a good thing for a country whose money is backed by the wealth of the nation.
“Although it’s odd how the Tories are coming out in force to defend their own when they have just passed a law making it illegal for a person to live in a property with a spare bedroom — and compelling people to move if they do. The rank hypocrisy is staggering.”
It is perhaps not so surprising if you understand the view of some Tories that the lower orders are a different sub species with different needs and motivation from their own ilk. What is perhaps more surprising is that the ConDems (surely the distinction between the two parties is now an irrelevance) don’t even subscribe to the notion that there has to be some kind of fairness in assigning the tax burden between the better off as they repeatedly seek to take steps that penalise or favour one part or other of their constituency e.g. the 61.5% marginal tax rate applied to those with incomes just over £100k, the withdrawal of child benefit so that the well off with children get no recognition whatsoever of their extra costs, the extension of VCT schemes and lower Corporation Tax rates which clearly favour those with very high incomes etc.etc. One wonders where are those on the right who want to spread the tax burden over the higher paid according to their ability to pay and according to their needs — any sensible person as a start might want to see a sensible progression of income tax rates from 20% to 50% rather than the current structure which has no intellectual basis whatsoever combined with some variation in allowances and credits to reflect expenditure on what are seen as “goods” rather than “bads” by society e.g children, energy saving, not occupying a house that is too big for you and your family. My guess is that such a rational income tax would raise rather more than the current structure without creating economic inefficiencies — and would be seen as being fairer even among the ConDems natural constituencies. It would also be more likely to actually work than any Wealth Tax thought up mainly as a political face saver, which I agree is likely to be effective as nailing jelly. The current behaviour of the Tories suggests that they have been captured by a very narrow self interested elite — and LibDems such as Cable are too stupid to realise what this has happened.
George Monbiot described the philosophy like this:
It has a fair claim to be the ugliest philosophy the postwar world has produced. Selfishness, it contends, is good, altruism evil, empathy and compassion are irrational and destructive. The poor deserve to die; the rich deserve unmediated power. It has already been tested, and has failed spectacularly and catastrophically. Yet the belief system constructed by Ayn Rand, who died 30 years ago today, has never been more popular or influential.
http://www.guardian.co.uk/commentisfree/2012/mar/05/new-right-ayn-rand-marx
He was right – this is Tory thinking now
How far they have moved from Disraeli and Sybil http://en.wikipedia.org/wiki/Sybil_(novel)
The Sybil era’s what they’re taking us back to, let’s not forget it was called ‘Sybil or The Two Nations’.
But Disraeli wanted to end that – that’s my point
What staggers me-and it takes a lot to do that-is that it is so popular in the USA,especially with Republicans who parade their Christians credentials.
Jesus didn’t teach people the Rand position, to walk by on the other side. But I suppose even in the original parable, those who walked by were Levites and Pharisees, part of the religious and political establishment.
This is Luke 4:
14 Jesus returned to Galilee in the power of the Spirit, and news about him spread through the whole countryside. 15 He was teaching in their synagogues, and everyone praised him.
16 He went to Nazareth, where he had been brought up, and on the Sabbath day he went into the synagogue, as was his custom. He stood up to read, 17 and the scroll of the prophet Isaiah was handed to him. Unrolling it, he found the place where it is written:
18 “The Spirit of the Lord is on me,
because he has anointed me
to proclaim good news to the poor.
He has sent me to proclaim freedom for the prisoners
and recovery of sight for the blind,
to set the oppressed free,
19 to proclaim the year of the Lord’s favor.”[f]
20 Then he rolled up the scroll, gave it back to the attendant and sat down. The eyes of everyone in the synagogue were fastened on him. 21 He began by saying to them, “Today this scripture is fulfilled in your hearing.”
That’s what Jesus said.
It is a million miles from Rand.
i have put an epetition online asking for mandatory land registration and a land tax so i think you need to investigate the completeness of the land registry.
I understand that the Land Registry is now 75% complete – up considerably on a few years ago.
There is already an LVT online petition. It doesn’t actually help though when there are so few signatures there.
Good grief. I actually agree with you about something. The mansion tax is, as you say, a bodge – and really quite an illogical and unfair one too. Council tax revaluation and additional band is equally pernicious, because payment is the responsibility of the occupier not the owner and as you say there is the “cliff-edge” problem at the band margins (though that would adjust to some extent through pricing in the property market). If we are going to tax property it should be on ownership, not occupation, and bear some relationship to the value of the land not just the bricks and mortar. I have to say that this would cause me personally a problem as I occupy a small house on a large plot of land, but hey, no gain without pain!
Frances agrees with Richard – yes, it’s 2012 alright! 🙂
The Left has to start making the case for a national Land Value Tax, chargable to the owner. It should be split between local and national government, replacing council tax and other property taxes before reducing national taxes.
Perhaps then we could levy smaller taxes on that property that is built upon the land (so we see the split-rate property taxation you see in parts of the US where the land is taxed more heavily than that which sits upon it) and on people’s financial wealth – providing a large threshold is in place.
Following the logic of LVT we then need to find more ways of collecting economic rents – collecting royalties from natural resources and more auctioning of things like aircraft landing slots etc.
As for the inheritance tax – turn it into a Gift Tax, payable by the recipient with a lowish threshold. If people want to split their estates between many recipients they pay less tax – thus spreading wealth. It would be charged regardless of whether the payer is near death or not – the compliance rate of the current tax is incredibly small.
I’d happily swap the 50p rate for these wealth taxes.
you mention collecting royalties from natural resources surely that is tied up between the crown estate and the church.
In the Democratic Republic of Congo? I doubt it…..
And I’m not sure how here either
well i know for a fact that the deeds to my parents house stated that any minerals were owned by the church as it used to be church land.the queen owns all land in this country under the agreements set in 1085 and that includes the seabed to the tune of 25 million acres.the duchy of cornwall recently went to court to renew his claim on some mineral rights.this subject deserves more research and the findings making public instead of this obsession with secrecy regarding land ownership and rights.
I am happy to accept your assurance
But the rights referred to are a worldwide concern – and as a matter of fact paying the Crown in UK i an issue that should be reported just as paying gov’t in DRC is an issue of concern when it comes to their accountability for using the funds.
So really not a very different issue at all
I agree the Mansion Tax is a bodge. But it does open up another front for the public debate on wealth inequality and also the regressive nature of council tax. Judging from the broadsheet articles and comments on Mansion Tax it’s clear people don’t understand what CT is for, although there is nascent awareness that it is unfairly banded.
The biggest area of misunderstanding however is that people believe that bricks and mortar appreciate rather than depreciate, and can’t see that the phenomenal rise in house prices is due to increased land / location value and this accrues to owner-occupiers, not those who merely rent their home. This value is created by public and private investment in infrastructure and social and business activity, but then artificially boosted by a dysfunctional housing market, the lack of capital investment in council houses (which massively increased demand in the private rental sector), and planning policies plus the massive extension of credit via deregulation. Land value tax addresses all of these e.g. as a charge on land irrespective of development it curtails land speculation (holding land out of use until prices rise), it lowers land prices so social housing is cheaper to build, it captures the gain from planning permission and steers investment away from property into productive activity. LVT can be levied to replace many inefficient and regressive taxes (personally I’d favour bringing VAT down to 15% as well as replacing CT and business rates) but what can Mansion Tax do apart from a raise a measily £2 billion?
Vince Cable has left open how he would apply a Mansion Tax. He references higher CT bands, a national tax or some kind of land tax. This ‘vagueness’ is possibly the most welcome aspect of his ‘intervention’ because it allows all these to be discussed and compared, and this is long overdue.
Much more to the point would be to control energy prices basing it on a kind of tax band. You get cheap units – say enough to power a small terraced house = your low energy band. Another band for a slightly larger family house at a higher rate and then the sky’s the limit. Give concessions for disabled, pensioners (who live alone) and historic buildings (Grade 1 houses don’t have the option of double glazing). To apply you need a tax code or you get charged the higher rate – equals killing those who are under the radar straight off bringing in extra revenue. Also people living on benefits will find living in that 10 bedroom house a bit too expensive and might cut down on having children to up their benefits. This should help cut down a lot of wasted energy. This is for all domestic properties only, which will include those owned by Limited Companies. Businesses will need a different model – most shops are too hot in any case.