The Mansion Tax: A stopgap, not a solution

24th January, 2015 9:12 am

It is easy to get on the bandwagon to oppose a new tax. The mansion tax may have flaws but it represents the restoration of some rationale to property taxation in the UK and therefore it is very important to get behind the principles underpinning the idea.

mansion_house.jpg

Let’s first get the flaws out of the way. The very name ‘mansion tax’ is daft, implying that anyone in a £2m house lives in some kind of detached palace. Secondly, the cut off of a valuation of £2m (at current prices unlike the council tax bands which are based on 1991 prices) is totally arbitrary when, in fact, there should be a series of new bands above the current £320,000 band H. Thirdly, revenue raised through property taxation is one of the few ways councils can obtain funds and therefore it seems odd that the money has been earmarked for central government spending on the NHS.

However, despite these issues,  the concept of mansion tax should be supported. It is interesting that Lord Mandelson supports the principle of more bands, and yet this is not a view he ever expressed while in office.

General elections are about ideas and general principles rather than specific details. While it is now mandatory to cost every commitment, in practice these are little more than educated guesses at the mercy of all sort of unknown unknowns.

The other issues identified by opponents of the tax can be easily dismissed. The notion that it is a tax on London per se is nonsense. It hits London disproportionately because that is where there is most affluence. Any progressive tax will have a greater impact on London than, say Liverpool, but that is something we, as a party, should embrace. While the proposal may, indeed, make it more difficult to campaign in some London constituencies, that cannot be a reason not to embrace the idea.

The mansion tax has, therefore, to be viewed as an interim measure paving the way for a wider consideration of the council tax system and, indeed, business rates which ultimately could be based on the concept of a wider reform such as a land value tax which would be much fairer and progressive. Ultimately, it should trigger the process of revaluation and the addition of extra bands. It also will stimulate the debate over how locally raised money is used, which should result ultimately in the greater devolution that council leaders across the country hope for.  Given the proximity of the general election, the mansion tax concept should be supported and then the details of how it will work and be implemented can be thrashed out.

Christian Wolmar is seeking the Labour nomination for the 2016 London mayoral election

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