My mansion tax solution: hit rich foreigners. But no one else

I am surprised no more attention has been given to Martin Vander Weyer’s suggestion in The Spectator two weeks ago that a mansion tax should be levied on those buyers who pay no other UK tax. Why has it taken so long for anyone to raise this idea? Where tax paid against income should be set against tax paid on property?

Let’s consider this question in psychological terms. Assume that you are eager to buy a particular house but someone else decides he wants to live there too. He is twice as rich as you are and so comfortably outbids you. Whatever the other person’s moral worth, you know two things. He has become rich under roughly the same system as you. And he has, in the process, paid more tax than you.

Now consider another scenario. This time you are outbid by a mysterious Russian who somehow bribed an official in some remote oblast to sell him a smelting works for 200,000 packets of Kent cigarettes and a Cadillac Escalade. He has paid no tax in the UK ever, nor does he intend to do so. He likes owning a house in London because our legal system gives him a safe refuge for his money and from the attentions of his former business associates. Here a mental klaxon should go off. Is it fair that people paying 40 or 45 per cent UK tax must compete for housing against people who pay none? To anyone other than an economist, the answer to this question is probably no.

Martin’s solution makes obvious sense. You should be made exempt from any mansion tax in the UK provided you are currently paying — or have paid in the past — a level of UK tax commensurate with the value of your house.