The return of the Mansion tax

The Laughing Cavalier

They won't be in power in 2010, or any other year, so it is all hypothetical.

david

Spent all of my working life in the West End of London, lived in Surrey from 1970 to 1990 with all its economic ups and downs. Never noticed the rich suffer once, heard then squeal often enough, but suffer no!

ssleddon

Regarding the Mansion Tax, they still don't get it, do they? The external (and theoretical) valuation of a property cannot be a fair way of taxing the owner. It takes into account none of their personal circumstances and is simply the politics of envy.

Doubling the threshold changes nothing. As they say, "The problem lies with the principle, not the principal."

Alastair

The effect of this proposal will be to turn large houses into multi-occupier dwellings. The tax raised will become minimal over time - with the relatively few super rich not caring. The Lib-Dems are a well intentioned naive party who do not live in the real world.

Nick

And why should someone with two one million pound houses not have to pay but someone with one two million pound house gets clobbered.

Naomi Muse

Very disappointing!

Local income tax is the only way to make it fair.

People who have lived in a house for years and now have a fixed income of less than the property value would indicate will be forced to move.

An own goal, Mr Clegg and Mr Cable! Please think again.

Was it not previous Liberal thinking that local income tax was the fairest way?

ssleddon is correct.

Dorothy Wilson

And where does this put properties like Belvoir Castle and Blenheim Palace? A 1% levy on the value of those would be absolutly crippling.

paul marchant

ssleddon "It takes into account none of their personal circumstances and is simply the politics of envy.'
Spot on. Yet in Clegg's distorted world this is putting 'fairness' back into the taxation system. He stated on the Today programme that he was asking people who live in "very large houses' (later re-defined as 'very very large houses') to pay a 'bit more'.
Certainly in central London there are many houses, even very modestly sized terrace houses, by no means even 'very large', which, as result of the boom in property prices are now valued in excess of £2 million, and many of these are owned by people whose incomes are such that the proposed levy would be far from 'fair' .
The term 'mansion tax' is a cheap Stalinist distortion of what for most would be the reality.
This grubby proposal should be seen for what it is, an attempt to wrong foot the Tories, to stir up class war and envy in a way which Clegg hopes will benefit his party, and which will have little impact on the economic crisis facing this country.
Doubtless the extent of the corrosive nature of the twisted and embittered envy and jealousy his party has once again unleashed will become apparent in this column.

General Zod

This is a typical LibDem policy that shows the party hasn't changed in the slightest and just throws out ill-considered, headline-grabbing tax proposals at every election that a half minute of scrutiny shows to be idiotic.

Dirty Euro

A good idea. We need taxes to go up for the rich. It can help pout down the national debt. And you cannot move a mansion to barbados.

Dirty Euro

paul marchant How is it Stalinist to tax mansions. Are you claiming any left wing policy is stalinist does that mean every right wing policy is neo nazi.

Peter From Maidstone

Dirty Euro, the Nazi party IS left-wing. It stands for National SOCIALIST. Therefore a right wing policy cannot be Nazi. But most left wing policies are Nazi AND Stalinist. For most people there is no difference between oppression by Nazis and Stalinists. They are the flip-sides of the same coin.

Taxation with consent is just. Taxation by the mob is just theft.

Ian Walker

A mansion tax is a stupid, envious, silly policy.

Taxing property on its value as the basis of personal taxation, though, is a pretty good idea. Taxing income has become virtually impossible, since "income" very rarely consists of "what my employer pays me" - most lower-middle-class people and up have a range of income-generating streams, through investments, traditional jobs, buy-to-let properties, etc.

The attractive thing about property is that you can't hide it, offshore it, disguise it as something else or otherwise avoid a tax on it. If you want to live in this country, then you need to either buy or rent some property here, and at some point the tax on that property will be passed on to you.

With a fair valuation system (index-linked to last open market sale price) and a flat tax across the board (tax everything, and tax it at the same rate, so there is no advantage or disadvantage to changing the occupancy) it could work extremely well.

Of course, the Liberals will never be in power, the Tories wouldn't do it, and Labour are too thick as we've learned since '97. Still, nice to dream

Michael Booth

No taxation without consent, or without consultation. It's OUR money not the government's and WE consent to be taxed. Before handing over even more of OUR money do we not have the right to demand money already received is spent wisely, that the freebooting champagne-swilling world of Westminster and Whitehall is reined in and that the nation's coat is cut to the cloth available? What is this blind acceptance of ever-more taxation?

cityboozer

Ian Walker,

"Taxing income has become virtually impossible, since "income" very rarely consists of "what my employer pays me" - most lower-middle-class people and up have a range of income-generating streams, through investments, traditional jobs, buy-to-let properties, etc."

I think you are showing some rather crass ignorance here. Firstly, "most lower-middle-class people" do not have any investments of the sort that you describe. Secondly, those who do (I am a reluctant landlord for various reasons) pay income tax on rent received, less costs - i.e. on the, err, INCOME.

"a fair valuation system (index-linked to last open market sale price)"

Linked via what index? CPI? Some building society's house price index? The FTSE? Something in between?

Why should someone who bought sensibly during the last property downturn and who sat out this boom knowing that it was unsustainable nonsense see a grab on their income just because some number which is not relevant to them has increased?

It is classic Lib Dem policy. It doesn't bear five minutes' examination but since nobody will give it more than three minutes they will get away with it.

General Zod

So would they give a tax rebate if the value of a property turned out to have fallen below £2m?

Snowman

A suicidal mistake by the LibDems, the receipts raised by this tax can never compensate for the loss of electoral support, the measure could only push the party’s left-leaning slot in the spectrum of British politics further to the left.

In an environment where assets of one sort or another sink or disappear altogether, houses provide, in spite of the transient ups and downs, the best of all asset classes to save for an uncertain future, and one can live in them, too. It matters little that only the super rich would get hit, a new avenue of taxation would get implanted in the statute books tempting any future government to lower the threshold.

A better idea: a tax on PC stupidity, it would cover millions of apparatchiks, and could clear the mountain debt at a stroke.

JR

Erm. Property taxes are used in many republican states rather effectively as a mechanism to collect income. I think there are good arguements against using this as a taxation method however slagging it off as some sort left wing coup is idiotic.

Ian Walker

@cityboozer: It's a poor assumption that house prices would remain in the same cycle under a property tax regime. But there's no reason you can't have a very fair, carefully weighted index that takes the cycle into account.

In fact, property taxation would probably provide quite an effective drag on house price overinflation, since who would want their house to be worth more?

The problem with the current system of income tax is that lower-middle earners pay proportionately the highest rate of net tax, because over a certain threshold, it becomes economically viable to pay an accountant to hide your money. In an era of electronic transactions, a credit card from a Bermudan account will work everywhere in the world, and a Manx shell company for your buy-to-let investments will keep the HMRC at bay for a good while.

It's like trying to tax soapy frogs. Real estate, by definition, is "real". Easy to identify, easy to quantify, relatively easy to value, hard to avoid paying. Those four things crucially mean "cheap to collect".

The bleeding heart argument is always made for the "scrimped and saved couple" who face being "turfed out of their own home." Sad, yes, but a roof over your head is a luxury that some people don't have, and a roof over three empty bedrooms is just as obscene to the destitute as wasted food or clothing.

Rivere

You can't be a Lib Dem unless you are fickle anyway. The only thing that is consistent is the Lib Dems constant ability to show the public that they are fickle. But they will not be in power so really....it is pointless as usual.

Snowman

Ian Walker:

For my sins, I’ve trained to become one of those people who, if you forget your telephone number, will estimate it for you, and as an economist I cannot but agree with you. Your points are spot on, rational, in an ideal world a property tax should be at least considered. The danger of opening up this can of worms lies elsewhere. Those ruling over us are unlikely to swap income for property taxes. They would happily charge both.

It would be equally sensible to reduce, or indeed abolish income tax, and replace it with tax on consumption. Should we not be taxed on our claims on resources rather than on our wealth creation endeavours?

In terms of aggregate taxation (income tax, VAT, Council taxes etc), the country already contributes near half of its annually created wealth to the Treasury. Darling’s spending power equals to that of the rest of us put together. Call me a tight twisted bastard, but I don’t feel much like opening another tax stream for him or anyone else who sits in no. 11.

Talking of parsimony: a man visits a Scottish friend who’s stripping wallpaper. ‘You decorating the house?’ asks the visitor. ‘Oh no’, says the Scott ‘moving’. (No racism whatsoever was intended in relaying the joke).

Dirty Euro

Paul From Maidstone Hitler supported Franco against the socialist he was not a socialist. He killed off the left of his own party on the night of the long knives. This is GCSE level. Does this make every right wing policy neoi nazi then. Very few people have multi million pound houses. Grow up.

ani

they are killing the property market with all this taxes
http://www.housesflatsforsale.info/housesforsalegoldersgreen.html