In the run up to the 2010 general election, the Liberal Democrats announced, amongst other things, a policy that was quickly termed a ‘Mansion Tax’.
It was unveiled as a ‘rob the rich to help the poor’ levy on all properties with a value of £1m or more. The middle classes gasped, the Lib Dems retreated and re-jigged things a bit and re-announced that their idea would relate to properties of £2m plus instead. All a bit hickledy piggledy and no doubt designed to appeal to the left of the political spectrum at a time of much vote grabbing generally.
But today the Mansion Tax thing has reared it’s ugly head once again. Thankfully Eric Pickles MP, Secretary of State for Communities and Local Government, has warned of his coalition colleague’s idea that to introduce a property wealth tax (another one in addition to the inexact council tax) would be ‘a mistake’.
Regardless of your political leanings, you’ll agree that with a property market that has been bashed into submission of late, to add more purchase tax in addition to a stamp duty level that is now up to four times what it was in 1997, would assist in kicking the market further when down. The implications would ripple downwards.
But it’s also altogether unfair. Home values across the UK vary widly. Indeed they vary considerably within just the same county. A large five bedroom Victorian house in mid-Essex, for example might be worth £1m. Half an hour up the A12 in Halstead, it’s worth half that. Why should one house, the same as another, attract a penalty but the other not?
Of course we can have the debate about ‘rich people deserving to be taxed higher’, higher than the 50% top rate that they doubtless already pay and after the heightened stamp duty that they have forked out on their more expensive purchase too. But that’s not the rub here.
Taxing property wealth is the bluntest of instruments. There is often a rift between the value of a property, perhaps owned by a surving widow or widower or family member, that bears little if any relation to the amount of money available to them in liquid cash terms.
Tax the bankers and the market speculators perhaps. Fags and booze? Why not.
But to increase the financial pressure on someone because of the home that they have worked hard for or have been left with, is just spiteful.
And in any case, who will set the value of each property?
How much will the valuation process cost us, the weary tax payer?
What mechanism will be put in place to oversee the appeals process (because there will be many appeals) and how much will that also cost?
What will happen if values go down? What measure will be used to prove that decline and over what period will a reduction in cost be scrutinised over before it is ‘accepted’?
A Mansion Tax would be unfair and draconian and not least, just as expensive to collect as any income it brought about.
We for one hope that Mr Pickles has his way.