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Wednesday, September 24, 2014

Labour's 'mansion tax' joke

Labour's proposal of a mansion tax is political posturing at its worst. 

It is Ed Miliband saying to the common man, "Look, we hate rich people! Please vote for us....... " before forgetting the rest of his speech.

I'm disappointed in Ed Miliband, his policies are sounding so inconsequential. Instead of putting forward a coherent and decisive strategy to make the UK more equal, he is out to patronise, offering up these moronic policy nuggets in hope they might appear greater than they really are.

We have three main parties in England, each offering the exact same political cake, but for the colour of the icing. Instead of three victoria sponges, voters want coffee, walnut and carrot. We want a real choice instead of this pretend version. No wonder nobody bothers voting these days.

I was hoping that post 'New Labour' we might get something different, more left, but sadly we have a party lead by Blair's B-team, with a centre forward that really should have been left back - in the changing rooms ( that's an Ed Miliband style pun for you, painfully funny I know. )

These misfits are desperately trying to appear connected to real people, when quite clearly they are not, and never at any point in their lives have been. Listening to the two Ed's is like sitting through David Brent at his most cringe-worthy sincere - the toe curling embarrassment of their speeches makes me perspire.

Ok, end of my rant, and back to mansion tax proposal - it's a rubbish idea. 

The premise that if you live in a £2 million pound house you should pay 1 percent of its value is ridiculous and totally impractical, and I can't begin to imagine the kind of games and disputes that will go on for those living in properties around the £2 million figure. 

If Labour do get into power, expect a long list of embarrassing data releases, until after a wasteful couple of years the policy is dropped.

RICS response about the proposed mansion tax was" a classic pre-election sweetener that would be unfair, fraught with unintended consequences and which could not cover increased NHS spending alone."

Surely, there are better and simpler ways of increasing the tax burden on the rich? 

Unfortunately, two Eds are clearly not bright enough to think of it.


Al said...

Although I wouldn't necessarily rush to defend the proposed Mansion Tax, mainly because the details haven't been fleshed out yet so I wouldn't know what I'm defending, I do sense a bit of knee-jerk anti-Labour sentiment on your part as opposed to a calm consideration of proposition.

As I said, we don't have the details but on the face of it there are several reasons why a Mansion Tax might be a sensible way of increasing the tax burden on the rich:

-- it'd be very difficult to avoid, as you can't exactly hide a mansion;
-- also very difficult to evade for the same reason;
-- the rich are under-taxed in the UK and increasing income tax at higher bands won't solve this problem -- rich people make their money often as capital gains so paying max 28% tax, and then plough it into luxury properties, which are then exempt from CGT due to primary residence relief. Poor-to-average-ish people, on the other hand, get all their income taxed as income at 20% or 40% and then spend most of what they earn on VATable and dutiable goods, therefore paying a much higher proportion of their wealth as tax. A mansion tax would go some way to re-dressing this flaw in the tax system;
-- it'd be a good way of getting some tax revenue from the international elite in London who otherwise are usually barely troubled by HMRC, just paying a piffling Band H council tax;
-- people always say "what about the little old lady with a low income but a massive house" -- I say it'd probably serve a social purpose in discouraging under-occupation. Yes that sounds heartless, but it's also heartless not to care about the families who can't find homes because of under-occupiers.

As I said, I wouldn't defend the Mansion Tax to the hilt as I haven't seen the details. Also, surely it'd be much simpler to introduce some much higher bands of council tax on the most expensive properties, rather than introduce a completely new tax.

Anonymous said...

Woo, that's scary, lets throw the old lady out of her house that probably she and her family have worked all their lives to own. Never mind all the memories she has there. Also I don't get the bit about the capital gains 28%, most top earners gain their income from their business, or from working for large companies not buying and selling property and businesses, and strangely enough they buy food, drink and clothes, etc, that all has VAT added, they just buy more which means they pay more!
Read the following to see how the wealthy have increased their share of tax payments up to last year.

Latest figures from HM Revenue and Customs show those earning £160,000-a-year – putting them in the top one per cent – will pay 29.8 per cent of all income tax.

It has risen sharply in the last decade. In 2003 the same group accounted for just 20 per cent of the total income tax raised.

So while the tax burden has fallen for low earners the burden has increased by almost 50% for top earners.

When someone buys a large house (so called mansion) the Stamp duty is sky high compared to the average house. A £200k house is taxed at 1% a'mansion' valued over £2m is taxed at 7%

It seems that the people who have made it are always attacked for achieving. yes I know there are a few that don't deserve what they take but on the whole most high earners work their whatsits off for what they get.


Al said...

I'm not suggesting throwing anyone out of their houses, but merely tweaking the incentives to make downsizing more attractive. Also, all mansion tax proposals currently on the table suggest that for the cash-poor, asset-rich elderly the mansion tax could be rolled up into inheritance tax -- so no one would be forced to leave (although they might choose to downsize in order to preserve their children's inheritance).

On the point that the rich pay more income tax than the poor, that is obviously true but it's also completely missing the point. It is the percentage of their income that they pay in tax (measured across all taxes, not just income tax) which is the important. The poor do of course pay a lower percentage of their income in direct taxes (such as income tax) but everyone forgets that they pay a much much higher percentage of their incomes in indirect taxes (such as VAT), which means that in total they pay a higher percentage of their income in tax than the rich. Have a read of this link if you don't believe me -- it starts off with some shocking statistics from none other than the ONS:

I'm guessing the reason why the top earners are paying paying a higher proportion of the total income tax take is simply because very high salaries have been even more grossly inflated over the past 10 years, not because they are paying a much higher % of income tax.

And this isn't about "knocking success"; that's just the classic cheap jibe made at anyone who doesn't close their eyes to the fact that the tax system is manifestly unfair.

Al said...

Clickable link: