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Politics

Labour loses the calculator... again

11 replies

CogitoErgoSometimes · 14/02/2013 14:07

'Mansion Tax' on just 70,000 properties is supposed to raise £2bn. An annual charge of £28,000+ per property per year. Are they just making this up as they go along?

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MammaBrussels · 14/02/2013 15:18

Am I missing something?

70,000 x 28,000 = 1.96bil

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CogitoErgoSometimes · 14/02/2013 15:53

My maths is correct.... but I can't belive anyone is seriously suggesting that charging residents over £2300/month for the privilege of living in their own home is a sensible proposal.

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ttosca · 14/02/2013 18:21

lol. Cogito supports every half-baked incompetent idea from the Tories which harm the poor and disabled but complains when the very richest have to pay more in tax for their mansions...

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ttosca · 14/02/2013 18:22

You're a real character, Cogito.

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meditrina · 14/02/2013 18:35

Well, no one knows how many houses of that price there are: 70,000 could be well wide of the mark. And £28k is massive tax hike, even if you assume that all asset-rich people also have a high income.

As he said the 10% tax band would cover 25m people, each stand to have their tax reduced by £80 pa (assuming £2b and nothing knocked off for administration costs of new house evaluation, new tax and new tax band). That means that the new tax band would be £530 wide. Given that the tax-free threshold is being raised (to above the top of the old 10p rate so thhe coalition has repaired the Brown damage far more than his does) and that this is muscling in on LibDem mansion tax, it does appear to be sound bite copycat politics rather than a worthwhile initiative.

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MammaBrussels · 14/02/2013 18:45

I think the main arguments for this kind of tax are that it is very difficult to avoid and progressive. It's based on an OECD paper IIRC. By taxing wealth rather than income it's a way of the treasury benefiting from rising asset prices while wages fall in real terms.

However, why is it that someone with £2mil in property is penalised while someone with £2m in art, cars or jewels are not? What about those with a £2.5mil house but a £2mil mortgage vs those with a £1.95mil house and no mortgage? Why not tax ALL property ownership by the same amount?

I'm not convinced it's a good tax, mainly because of the equality arguments and especially once regional house price inflation levels are factored in.

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Sleepwhenidie · 15/02/2013 10:10

I agree Cogito and Mamma, it is unfair for exactly the reasons you say - it is also, ultimately, a tax on living in London because that is where 90% of properties over £2m will be - and I realise that value is massively out of kilter with the rest of the country, as are lots of people's incomes in London, but £2m in London really does not get you an amazing house and mean you are cash rich. In some areas it would get you a 3 bed terrace, even less in others. Many owners of these will be stretching themselves to the limit to pay for them, in the same way as everyone else in the country is, it is all relative.

Why should someone living in London in a £2.1m house (with, say a £1.5m mortgage) pay a mansion tax when someone living in, perhaps, Yorkshire in a grand £1.9m mortgage free (proper) mansion with a yacht, horses, art, jewels, not pay? Why should you pay tax on something you have bought out of already taxed income (twice taxed if you count stamp duty)? Many people living in properties they have owned for a long time may find themselves caught by this just as a result of the property market rising and simply won't have the income to cover such a huge rise in costs, they would be forced to sell and downsize their homes or relocate. And I can hear people saying - well sell then, but how would you feel if that was your elderly parents? £2k+ more tax a month is a lot for all but the proper super rich to find.

As an aside, I wonder how this will be implemented...how will they value houses unless they have actually been bought/sold at £2m plus? I can imagine lots of legal challenges if valuations around the £2m mark are made without any concrete evidence to prove a value. Also, what will the effect on the property market be? It would inevitably push many people out to the areas just outside London, increasing values there - good or bad thing? I'm not sure.

I agree the wealthy need to pay more tax somehow but this really isn't a good way to do it. It is such a cheap shot for Labour, going for the popular "hurt the rich" strategy that many outside of London may support but won't make any difference where the Tories have safe seats, ie where the tax will hit hardest - so they won't lose any votes with it.

The Government need to find a way to get more from the Arabs and Russians at the very top end of the London property market, the ones buying houses that are £10-£50m and paying nothing, not living there in most cases...increase their stamp duty and close the loopholes perhaps? Would be interesting to know how much that could raise.

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CogitoErgoSometimes · 15/02/2013 12:16

I wondered why they don't just introduce new council tax bands beyond 'H'. Have Band J, K, L etc. and catch the £1m homes, the £2m homes and so forth on a sliding scale. Not £2500/month but something more realistic. Stamp duty definitely needs an overhaul.

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MammaBrussels · 15/02/2013 12:52

Doesn't CT go to the local govt rather than central? Can't be used to fund 10p rate of income tax.

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meditrina · 15/02/2013 13:10

The news last night said that to fund a 10p tax band of the same width as that abolished by Brown would cost £7b not £2b. So I think this announcement is even less than it first seemed.

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MammaBrussels · 15/02/2013 13:27

I thought it was going to be;
£0-10,000 = zero tax
£10,000 - 11,000 = 10%

Which would be different to the rate Brown had on the first £1,500 of taxable income as then the personal allowance was much lower so it affected more people and, therefore, cost more.

I don't think the details have been published yet. This is Ed 'n' Ed getting in before Osborne's budget so they can say the Conservatives are copying their ideas.

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