Monday 3 October 2011

Mansion Tax or more Council Tax bands?

The following letter is self-explanatory:

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

Dear Vince Cable,

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,

Vince Cable's department promises a reply within fifteen days. Watch this space.


  1. That's a splendid letter, all makes sense to me.

    The other point being, that instead of banding homes by approx. selling prices (like we did in 1991) we could work out site rental value for each one, and band them by site rental value instead.

    More of my musings on the topic here.

  2. Thanks for your comment and support, Mark. Site value rating is something for which I have campaigned all my Liberal life. Why do these good ideas get lost?

    The 15 days for a reply to the letter are now up so I'm expecting a response any minute. Will let you know what is said.

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