It's a rare moment that Matthew Sinclair of the Taxpayers' Alliance and I agree on something - but we did on the fact that the mansion tax won't work this morning when talking on the Today programme on Radio 4.
He and I agreed that the tax would need a complete revaluation of UK property to work - but as I pointed out in that case you might as well reform the whole of UK local government taxation and have a land value tax instead.
And let's be clear, nothing short of this would be acceptable. Local government tax is now a mess. In the south east half of all properties pay at the top rate making it a bit like a poll tax. And it raises less than 20% of local authority funding which emaciates local democracy when people realise that in effect it's simply a paying agent for central government departments.
So I welcome reform - but backing on a mansion tax is not the way to do it. That will create injustice, arbitrary valuations that those with means will spend years appealing at great cost, and will ultimately raise only a fraction of the money that the 50p tax rate, changes to the domicile rule and cracking open tax haven secrecy can provide on wealth, which is its supposed target.
The mansion tax is a poorly conceived political gesture that was never intended for serious consideration and which a brave party would abandon in favour of proper progressive taxation reform both at local and national level.
But as we know the LibDems are not a brave party or we would not be in the mess we're in on the NHS. So they've proposed a tycoon tax instead. I'll deal with that next.
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if people go to the epetition website i have set a petition up for a land tax.also i am asking for the mandatory registration of all land.for too long the issue of land tax has been ignored by all parties even though the greens have land reform in their manifesto they have been remarkably quiet on the matter.
When are you going to join the Labour Land Campaign, Paul? It’s not just for Labour Party members, take a look at our website http://www.labourland.org.
Richard, we need a silver-spooner tax. Young couples from well-off families are getting a foot on the housing ladder through properties & deposits gifted to them by their parents. This causes an unfair playing field in the housing market and adds to the inequality in our society.
So we should abolish potentially exempt transfers for IHT purposes. All lifetime gifts should be chargeable lifetime transfers, subject to the usual small gifts exemptions and the nil rate band.
Richard,
If Vince is serious about LVT (he is listed as a vice president of ALTER) would this not be a wholly understandable way to put a toe in the door? All those who would howl about ‘taxing your garden’ are silenced while the valuation can get going. It seems like sensible politics to me.
What do you think of Ronan Lyons valuation ideas in his study: Residential SVT for Ireland?
http://smarttaxes.org/wp-content/uploads/2012/01/Site-Value-Tax-in-Ireland-Identify-Consulting-final-report.pdf
“The mansion tax is a poorly conceived political gesture that was never intended for serious consideration and which a brave party would abandon in favour of proper progressive taxation reform both at local and national level.”
I agree it is poorly conceived. But by “progressive taxation” do you include taxes that are not only fairly distributed, but also rebalance and incentivise productive economic activity?
Our present system skews private investment and bank lending in the wrong direction – into property, rather than lending to SME business. If only Chuka Ummuna and Rachel Reeves looked at how Germany taxes it’s landowners with a property tax (applying to property owners only), a capital gains tax (on main residences sold with 10 years of acquisition) and rent caps in the major cities, they’d understand why Germany business and industry have such high levels of investment compared to countries like ours (or Spain and Ireland) where property is untaxed, productive activity is low, and the boom/bust has been so devastating.
In the study, ‘Rebalancing the Economy (or Buyer’s Remorse)’, Manchester University’s Centre for Research on Socio-Cultural Change (CRESC) pointed out that under Thatcher and Blair, the real value of housing equity withdrawal was marginally larger than the real value of GDP growth. They advocate LVT as part of the solution to revive manufacturing and re-boot the stagnating UK economy.
http://www.cresc.ac.uk/publications/rebalancing-the-economy-or-buyers-remorse
Love to know what you think of it Richard, if you have time. ‘Groundhog Day’ is another brilliant work from this centre, directed by Professor Karel Williams.
I spoke in favour of LVT on Radio 4 on Saturday
I’m not sure I could be clearer