The Labour councillor in charge of financial policy at Camden council in north London has become the latest senior figure in the party to voice concern about Ed Miliband's and Ed Balls' proposal for a mansion tax on homes valued at £2m-plus.
Theo Blackwell told a London newspaper that it would be a better bet for Labour's shadow chancellor Ed Balls to reform council tax banding rather than introducing a tax on all £2million-plus homes should Labour come to power next year.
Labour-run Hammersmith & Fulham council is opposed to the tax saying it will unfairly affect its residents while leading Labour national politicians Margaret Hodge MP, Andrew Adonis and David Lammy MP - who all want to be considered as the party's candidate to be London mayor - all prefer a reappraisal of council tax bands to a mansion tax.
Former Chancellor Alistair Darling says simply that the tax is a bad idea and TV presenter and geneticist Lord Winston (yes - he's Labour, too) says the tax would reduce people's willingness to donate so have a serious knock-on effect for charities.
Comic Griff Rhys Jones - born in Wales and once a petrol pump attendant - says he'll move abroad and buy a massive palace if this fatuous tax is introduced.
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Comments
The whole of the UK tax system is over complicated and mainly unfair.
ALL of the States income (tax) should be based on actual INCOME ONLY.
That is fair for all. Dig down and think about it.
I greatly suspect that Theo Blackwell must live in a 2million plus house.
But what do you really think I think you need to go into more detail about why it's such a bad idea, you've been too brief.
Only kidding. I actually agree with much of what you say.
Good rant!
I dont like how many loopholes there are and the fact that like stamp duty there is a definitive figure where it KICKS in. Incremental taxes are surly a better way of approaching these issues.
WHY MANSION TAX IS ONE OF THE WORST POLITICAL IDEAS EVER:
PART 1 - ITS AN ECONOMIC FALLACY:
1) It wont raise 1.2b. Labour have mistakenly calculated as if the tax will be within a vacuum. 1.2b is the estimated GROSS PROFIT. The NET PROFIT will be much less due to the following resultant revenue losses:
A) The number of 2m+ properties will reduce because they will:
i) Be undersold at 1,999,999
ii) Be split up into multiple less-than-2m properties
iii) Be divided into multi-tenure leasehold / freehold titles, with each title worth less than 2m
iv) Become shared ownership, with different family members owning different parts of the property, with each share worth less than 2m
B) The admin costs associated with operating the tax
C) The loss of revenue due to leakage of Stamp Duty, Capital Gains Tax and Inheritance Tax
2) 1.2b is not enough to make much difference to the NHS. Last years NHS bill was 95b and the shortfall 30b
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PART 2 - ITS POORLY TARGETED AND UNFAIR:
Itll affect too many of the wrong people and not enough of the super-rich, because:
1) 96% of properties affected are in London & Southeast. Its akin to a tax on these areas, as opposed to equally across the UK; and is thereby discriminatory.
2) Most properties affected arent mansions but either flats (38%) or terraced houses (36%)
3) Many who own in a 2m+ property have already paid their fair share in taxes; in fact up to 70% of their familys income as INCOME TAX, STAMP DUTY and IHT. And possibly VAT and CGT too! Someone may own 2m, but if they earned 6.7m and paid 4.7m in taxes, leaving only 30% left, theyve already paid their fair share.
4) Many living in 2m+ homes are cash-poor asset-rich. They may be comparatively rich, but they are NOT the super-rich. The proposed deferral of payment equates to a huge rise in STAMP DUTY and IHT. If they cant afford to pay then theyre clearly NOT the super-rich so shouldnt have to pay it!
5) MORTGAGES arent taken into account. Someone who owns a 2.5m property with 700K mortgage and 1.8m net equity not only has to pay the tax, but also pay the same amount as someone owning a 2.5m property outright.
6) There will be too many innocent casualties. E.g. A family I know purchased a house for 2m+ with a mortgage and spent a huge sum converting it to disabled-friendly for their paraplegic daughter. They will have to sell the house making a huge loss; and as a result they will have to sack the daughters carer and wont be able to pay her future hospital bills.
7) Middle-class families living in a 2m+ property will have to pay the tax if they earn 42K+. Most have mortgages and have to work hard to be able to pay their bills. They are not the super-rich and wont be able to afford to pay the tax.
8) Too many of the super-rich wont be affected. Wealth tax shouldnt be selective and only target properties. Its unfair to tax only those who have (wisely) chosen to invest their wealth in property and not others whove invested theirs in other assets. E.g.:
A) A guy I know owns a 1.9m house, plus 20m in luxury cars, a 8m private jet, a 2.1m helicopter and 20m in paintings, totalling 52 million; and yet he wont have to pay.
B) Someone owning 100 properties valued 1m each, total 100m, wont have to pay either.
But someone who owns one 2m property would.
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PART 3 THE AVERAGE PERSON WILL BE AFFECTED:
1) Its so unfair that the super-rich will avoid paying via many plausible avoidance methods. Many will move their wealth, their businesses and themselves out of the UK. As a result, the UK's economy will nose-dive.
2) When INHERITANCE TAX was introduced it was promised it would affect only the rich, but now the average person pays it; and so will the same happen with Mansion Tax. Its just a matter of time.
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PART 4 IT WILL BE CATASTROPHIC FOR CHARITIES:
Lord Winston, a Labour peer, has said: It makes it extremely difficult to raise charitable donations. Because [those liable to pay the mansion tax] will start refusing one of the most important areas of [charity] giving, legacy gifts That will affect charities like Cancer Research UK, which relies on legacy gifts (which are in fact its primary source of income).
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And this is just the tip of the iceberg regards why Labour's mansion tax is a terrible idea!
The bottom line is that it will be predominantly MIDDLE-INCOME FAMILIES and INNOCENT VICTIMS who get clobbered by the Mansion Tax, while far too many of the super-rich get off scot-free.
IMO what's really needed here is to scrap the ludicrous Mansion Tax and both clamp down and close loop-holes regards tax avoidance by the super-rich, and carry out a much needed and long overdue comprehensive review of the COUNCIL TAX system.
Rant over! ;-D