Left Foot Forward makes the case for a mansion tax based on the fact that within the current council tax system the rich do not pay their fair share.
Ed Miliband announced yesterday that a future Labour government under his leadership would reintroduce the 10 pence starting rate of income tax rate scrapped under his predecessor Gordon Brown and pay for the subsequent reduction in revenue to the exchequer through a mansion tax .
Left Foot Forward agreed with this progressive measure, and we set out why here.
It’s also important, however, to look at why the current system is unjust.
At present, a person who owns a house worth tens of millions of pounds can pay the same amount of council tax as a person living in a modest suburban home.
This is because council tax banding is at the same level it was in 1991.
Banding may have stayed the same, but since then property prices have more than quadrupled. The average price for a property in London now sits at a whopping £445,651.
In the table below is the council tax banding for the Royal Borough of Kensington and Chelsea for the financial year 2012/13.
The average house price in this, one of London’s wealthiest boroughs, is just short of one and a half million pounds.
This means that a resident of Kensington and Chelsea, such as Goldman Sachs boss Christoph Stanger, who owns a £7 million pound property in Kensington’s Palace Gardens, pays an annual council tax bill of just over £2,000 – the same as a middle class family owning a property in the neighbouring borough of Tower Hamlets, where the average property costs £367,068 – and also the worst area for child poverty in London.
| Band | Council Tax | Range of values |
|---|---|---|
| A | £717.15 | up to and including £40,000 |
| B | £836.67 | £40,001 to £52,000 |
| C | £956.20 | £52,001 to £68,000 |
| D | £1,075.72 | £68,001 to £88,000 |
| E | £1,314.77 | £88,001 to £120,000 |
| F | £1,553.82 | £120,001 to £160,000 |
| G | £1,792.87 | £160,001 to £320,000 |
| H | £2,151.44 | over £320,000 |
Communities secretary Eric Pickles has also ordered officials to destroy data collected by previous governments that could allow a widespread rebanding of properties. This one of the reasons we now need a mansion tax, because the current system is incredibly unfair.
As for the objection that a mansion tax will force older people out of properties which, due to the house price boom of recent years, are now worth more than £2 million pounds, we could quite easily say that, if you are past a certain age, you can switch your mansion tax into inheritance taxes, paying nothing while you are alive and staying in your house.
68 Responses to “Why a mansion tax? Why now?”
Jonathan Roberts
Council tax is irrelevant to this issue. You pay council tax for the council to provide you with services – which for most wealthier people is limited to bin collection, street cleaning, street lamps and so forth. They are less likely to use other more expensive council services, thus being net contributors.
We already tax people for buying a large house through stamp duty. We tax people for services provided to that house through the council tax. We tax people on dying in that house through inheritance tax. We tax people on the income they’ve used to buy that house through income tax. We tax people on selling their house through capital gains tax.
Now we are taxing them again, to the tune of £25,000 a year.
At what point does liberty come in to this? Has the Labour Party abandoned all belief that an individual is a free citizen, and are people now just cash cows for the State? At what point does a homeowner have the right to say ‘this is my house, not yours, I already pay a great deal in – so leave me alone’?
Old Albion
This rather illustrates the unfairness of council tax. How many multi-millionaires living in houses worth “tens of millions of pounds” actually take from council services or indeed use them, to the same degree as those with modest homes and incomes?
This ‘Mansion tax’ seems to be a case of partially returning to the system of rates.
Perhaps the IDEA of a ‘community charge’ was better? Even if the system ‘designed’ at the time had some rather glaring problems.
Selohesra
mansion tax effectively a tax on the South East – how about some other regional taxes – the pigeon tax, the leek tax & the haggis tax?
Gareth Millward
Or… the richest people in the country over the past 50 years have disproportionately taken most of the fruits of economic growth, despite the fact that we need both enterprising individuals AND workers to run the country. It is not a crime to live in a nice house in a nice area. However, when the wealth to pay for that house has come off the back of the hard work of poorer citizens they should EITHER pay them fairer wages OR pay a higher level of tax so that we can redistribute some of the gains of economic growth in a more equitable manner.
Workers are wealth creators too. And while they cannot do what they do without visionary business leaders, the reverse is also true. At what point does communal responsibility come into this? Has the political right abandoned the idea that no man is an island, and poor people are not just poor off their own inadequacies? At what point do the citizens have the right to say “I helped build that house. I already pay a great deal in – so how’s about you contribute a fairer share too?”
Old Albion
I only mentioned ‘council tax’ because LFF seem to think the wealthy are ‘getting away with it’ As it happens i pretty much agree with you.
But i don’t see a need to return to the 10p tax rate. Far better to raise the tax threshold to the current idea of £10K. Though i would like to see it rise higher eventually.
What is the point of attempting to get folk off benefits and into work, if you then tax their low incomes