To think that the mansion tax breaks the principles of taxation

[NorthXNorthWest]

Most taxes fall into:
Income you receive
Profit you realise
Spending you choose

Council tax sit outisde of this. Its more like levy based valuation bandings and was a quick and dirty fix after the poll tax fiasco. It is effectively a service charge not a wealth tax.

Whereas mansion tax is the government estimating the value your actual house, then treating this valuation as pure profit then taxing you on this. Given the majority of homes are purchased with mortgages and paid for by already taxed money:

Why is

Mansion Tax = Estmated value × %

More reasonable than

CGT = Profit * % (Profit = Actual sales price - (Purchase price + actutal costs)

With actual costs being renovations not stamp duty or interest paid on your mortgage

I am not in the mansion tax bracket. I do accept that some taxes need to rise but I don't believe this is the solution.

It will work at all bands because the amount they are charged is going to be a percentage of the price the property is valued at.

ISTR there was a mumsnetter on another thread (I didn't 'watch' it so can't link) who said their property transaction collapsed the day after the budget due to this tax.

Its bloody ridiculous (im nowhere near or ever will have a £2m house).
Its for local services and should be per adult head count.

I definitely think this will happen. Actually I expect that once it's been embedded for a few years the thresholds could well gradually reduce. It's a tax that won't raise a great deal at the moment but will be much more worthwhile for the government the more people are brought into it's scope.

Also - please correct me if I'm wrong but is taxing ownership of an asset new? Most taxes are either service charges (eg council tax, vehicle excise duty), target transactions (income tax, CGT) or levied at the time assets are realised (IHT). Can anyone think of any other taxes that exist to tax ownership of something? It seems that once this principle is established it's a small step to extend this to taxing other assets just for owning them.

is taxing ownership of an asset new?

Well see how far you get without taxing your car, and get back to me.

Wealth taxes are part of most countries tax mix. You need a mix to ensure the savvy with expensive accountants don’t pay less than ordinary people on paye (pure income taxes can be quite unfair because those with the most means to pay often pay less). If you can afford a £2m house then these relatively small amounts are pocket money. I pay nearly £3k for my band e house, my share is 10% of my income!

@ByQuaintAzureWasp. We tried that, didn’t go down well! Don’t you remember the poll tax riots

Nah. It’ll be abolished when Labour are ousted at the next election.

But taxing your car is linked to emissions and you don't have to pay if you aren't driving it (SORN). It's a tax on using your car on the public roads. Not the same at all.

They tried that with the poll tax and the country lost its shit.

Tbh I think a charge pp for services is fairer than a charge depending on what your house is worth.

It's another disgusting, ill thought out tax designed to beat "the rich" and thereby placate the labour left

It is a fair principle.

Do say more

Don't be such a fanny. Council tax and the old "rates" are based on the value of your property as well.

And plenty of countries, including the USA have an annnual property tax.

Yes. So do Germany, France and Canada. USA and Germany are two of the world’s three biggest economies.

But is that all properties rather than just ones over £2mil deemed to be owned by the wealthy.

Gotta start somewhere!

I would have preferred a uniform, very small per cent on all properties to replace Council Tax. But given the uproar this and similar uplifts have caused, I imagine we would all be deaf had that happened.

Never destroyed mine. Here I am, ancient, and in danger of having to pay the mansion tax having aspired like mad, and still socialist.

That might be a post I made that you are referencing.

My point was simply that it is fair that those with most to lose contribute a bit more to fund the projects that need doing.

As an example, take the Thames barrier. A project that needed to be done to protect London, and it has worked well. There are anti flood projects all over the UK, not on as grand a scale, but essential as we get wetter from climate change.

Not all tax goes on benefits as you know.

Thinking about it, for flood defences, maybe property footprint would be a good way to split the costs. A tower block apartment in Dagenham has a tiny footprint compared to a mansion on the Sommerset Levels. But that would be a new system, and cost to implement as you say. So the Guv went with council tax bands. Not the fairest way perhaps, but fair enough, and with the structure in place to collect it.

@Sesma yes I would prefer wholesale reform to council tax and a proper property tax. The current system is crazy, as the owner of a band B property in South East London I literally pay more than someone in Westminster who owns a band E property. But we have to start somehwere.

My understanding is that the IFI is what is left after the massive back pedalling the French government had to do after their wealth tax failed. It's the policy equivalent of putting lipstick on a pig... it freed up no housing, cut no prices, the wealthy sidestepped it, and it raises barely any real money..

There are no principles of taxation and this is an issue (like private schools VAT) where most people won’t play their sympathy violins fornyou

I live in a band F property in the NE of England, I currently pay £3400 in council tax per year which is equivalent to ~1% of my property value.

£2500 is 0.1% of the value of a £2M house. The majority of houses affected by the mansion tax are in London where council tax for a band F property is much lower than it is in the NE despite the fact that London has integrated and cheaper public transport, free museums, and schools get more money per pupil. My heart bleeds for them.

But property tax works well in
America and Germany, two of the world’s three main economies.

I am guessing that most opposed to this tax ‘on principle’ do not wish to emulate the Chinese principles of (non)ownership: you can buy your dwelling, but only lease the land it is built on from the government, for a relatively short term. I am grateful to a contributor on the ‘mansion tax’ thread for explaining this.

One of the arguments for a mansion tax is that older homeowners have benefited from extraordinary increases/windfall in value simply by being in the right place at the right time, I’m not saying we should tax profit, only that profit is a more reasonable and fairer metric. It directly addresses the 'unearned wealth' criticism, ability to pay, and aligns with how most other taxes already work.

My point was that If the real goal is to tax 'wealth', then an annual charge on an asset treated as pure profit for the basis of a best guess, government massaged valuation is one of the most ethically questionable tools you could choose.