Today we glimpsed what Boris Johnson might do if he had more power, in London at least: jack up council taxes for some and lower business rates. In a Communities and Local Government select committee hearing on fiscal devolution, the Mayor of London outlined why, if the power was handed down from central government, he’d increase council tax for the richest Londoners:
‘If you compared with a Russian oligarch is paying on his stuccoed schloss in Kensington in annual council tax compared to what such a gentleman might be asked to pay in Paris or New York or anywhere else, it is quite stunning the difference. No one has yet grasped that.
‘I’m by no means an advocate of a mansion tax. In fact, I vehemently oppose such an idea. But we cannot go on for ever without looking at our council tax valuations, in my view.’
How would he afford this? When it was put to the Mayor ‘you’ve clearly ruled out the idea of a Mansion Tax but would you support extra council tax bands, particularly on more valuable properties?', Boris replied that he wouldn't raise rates across the board:
‘I think that’s the kind of thing you need to look at. I don’t have the answer now. It would be a matter for the negotiation and discussions between City Hall and Boroughs about how we’d do it. There’s a reason this hasn’t been done — because it’s very difficult and very unpopular — but that doesn’t mean it isn’t the right thing to do’
As a result of the tax rises, the Mayor would then be able to lower business rates:
‘When you go out and talk to business, they feel they are being absolutely clobbered by business rates, whereas if you look at the top rate of council tax being paid in the city, it is in my view inadequate with what is being asked of our competitor cities. It’s time for rebalancing…and I think local government is the place to do it’
These comments are typically crafty stuff from Boris, bound to annoy people on all sides. The Lib Dems will be delighted that a Conservative is discussing something that sounds similar (although isn't) a Mansion Tax, while Conservatives will distance themselves from any idea of jacking up taxes on expensive properties. It might be populist, but it won't be popular with Tory donors.
But at the same time, Boris would be taking these steps to encourage enterprise and growth. It’ll be interesting to see which of his fellow Tories side with such a proposal. For one thing, we know George Osborne has been considering a tax on properties purchased by foreign buyers. Maybe this could be the start of a new political partnership?