Tuesday, 15 April 2014

Mansion tax proposal revised, but not revised enough.

Harold Wilson had a phenomenally good memory and, whenever a good idea came along, he was usually able to say that he had proposed that very thing umpteen years ago in a speech on the Xth of Y in  Ztown  at 2.30 in the afternoon.

I cannot compete with that, but, now that the Liberal Democrats have decided to abandon our proposal for a Mansion Tax  and substitute an additional Council Tax Band I can reveal that I wrote to Vince Cable  with that very suggestion over two years ago, viz:

                                                                                                27th September, 2011.
The Rt Hon Vince Cable M.P.

I believe you were too dismissive of my suggestion, put to you at the Guardian debate last week, that, instead of a Mansion Tax, we should simply slap a few more Council Tax bands on top of the existing ones, which in England  presently stop at Band  H (over £320 000.)

My argument is that your proposal of a tax on “mansions”  worth over £2million (though I preferred your original proposal of over £1m, from which our party cravenly back-tracked) is politically unpopular because it is both a new tax, and appears vindictive  in singling out the very rich indeed whilst letting those almost very rich indeed off the hook.

The advantages of extending  the  Council Tax bands are that:

  1.  It is merely an extension of an existing tax, and
  2.  It would apply progressively to the very large number of houses valued at between £320 000 and £2m (and why stop at £2m?) 
Your objection, given at the debate, that the largest part of such an extension would accrue to a handful of wealthy London boroughs is invalid, in that there are plenty of houses worth more than £320 000 outside London – there are even some here in Kirklees.  The excesses of revenue received by more wealthy areas could be re-distributed to poorer areas by an equalisation scheme.

The only valid objection I can see to this proposal is that, ideally, it would involve a re-valuation of all properties, from which, because it was misrepresented as a precursor to increased council taxes, the Labour government shied away.  However, we are the party of honest politics, so should get on with it.  If we too , choose to duck this issue, then it should not be beyond the wit of your civil servants to impute a 1992 value to all properties worth above £320 000 at 1992 prices.

Of course, as good Liberals we should see this as a temporary measure pending the long overdue introduction of site value taxation on all land.  This will probably require a government in which we Liberal Democrats are the main party, so may be some time off.

Yours sincerely,

 Dr Cable's department claims  to answer letters within 15 days but have yet to receive a response.  However, if the Department has moved at least partly in my direction  I suppose I prefer that to  a fulsome evasion.

Unfortunate the new proposal, as far as I can tell (there was only a brief comment in last night's news and nothing as far as I can see either n today's papers or on the party website) is a change of name rather than the Full Monty.  There is to be not a series but only one additional tax band, for the +£2m mansions, so nothing for the  £320 000 -£2m sub-mansions, and no mention of taxing empty properties or, better,  a land tax.

Still, in the UK progress comes slowly ( a century after  the first reform the House of Lords is better but still undemocratic) and this is a step in the right direction

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