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
Gareth, I am by no means arguing that the richest (in terms of income) should not pay the most. I am, however arguing, that the richest already do pay a very large amount. The top 1% has a marginal tax rate of 58% which is among the very highest in the developed world. The top 1% pay 28% of all income taxes.
This measure, of course, does not tax income (which is already taxed) but wealth – which is essentially what assets remain once all other taxes have been paid. And as I demonstrated, there are many taxes that will have been paid already (many more than my list).
Whenever a new tax idea comes along, people say ‘ah, but the rich should pay more’. Well of course they should pay the most, but I do believe there has to be a limit.
On a wider note, I find it distasteful that the general tone of current political debate is to constantly slag off the people who pay the most towards our public services. You wouldn’t slag off the stranger who bought everyone in the pub a pint. If I was a top earner, had taken risks, created jobs, contributed to the economy and excheqeur significantly – I wouldn’t want to be thanked, but I would want a bit more respect than is currently on offer.
Gary Pepworth
Having highlighted in bold that the current unfairness of the council tax is because banding is the same as in 1991, surely the obvious solution is to adjust the banding?
Newsbot9
Yes, all good middle class tax rises, which have been taken out of services on the poor. You’re certainly not supporting the poor when you’re raising the poverty premium on them!
Newsbot9
If you want to be left alone, go to Somalia. In Britain, you’re part of a society. How dare someone ask you to contribute, according to your means.
25k? No, 10% of that, at most…
Newsbot9
The top 1% own more than 28% of the wealth, and wages are better spread the actual wealth distribution. Moreover, no, the top income tax rate is 45% on higher rate inco,e, after the Tory slash. NI is capped, with a 2% rate after the cap, etc. UK tax rates are, internationally, very moderate – and the same is true historically.
And yes, it’s one step towards a more sane tax system. Wealth is exactly what needs taxing rather than income, because wages are plummeting as a % of GDP, and yet you demand they be high-tax, while unearned income attracts far lower rates of tax!
I’m slagging you off for demanding your bills be slashed, when you are accumulating wealth ever-faster, and the poor are starving and freezing. It’s downright malevolent of you. Thanked? No, you should be seeing the billions paid to you in corporate welfare be slashed, and you should have to pay workers properly.
Respect your tax-evading? Sure, bend over, I have a boot here.