As we all know the Mansion Tax, as proposed, is a wealth tax by any other name and is not designed to raise any money for the NHS but simply to court populism. It has never worked in any part of the world but this does not stop the Ed’s ‘bandwagon of envy’!
In the meantime it is already badly affecting the residential market with far fewer transactions at a time when the government need as much revenue by way of SDLT to dent the deficit.
The main problem with the Mansion Tax proposal at present, is that it takes no account of debt. You could find that someone with a £5million property and a £2,500,000 mortgage (who only owns £2,500,000 of equity) will be paying £25,000 (i.e. 1% over £2million) on his borrowings. This will be the first time in the world that any government has been sufficiently crass to impose a tax on debt.
Even the hapless M. Hollande imposes a property tax on the net equity of any property. In the USA property taxes are deductable from Income Tax but the genius’s in the Labour Party’s ‘high command’ want to impose this regime upon us that is going to ‘drive a coach and horses’ through all the sectors of the residential property market not just at the very top.
Oligarchs can afford to pay a Mansion Tax but there are not enough of them in aggregate to make a ‘hill of beans’ (Bernard Shaw). There will be 30 Labour MPs in the south that will be badly affected at the next election by the Mansion Tax proposal and to try to appease the London Mayoral prospective candidates (Tessa Jowell etc.) Ed Balls is already designing policy ‘on the hoof’ by changing the rate of tax in the £2 to £3million band from 1% to .3% since this is the most populous sector. How is he going to make up the difference on the other band goodness knows!
Lest we forget a 1% Mansion Tax is a 2% pre-tax liability (at the higher income tax rate) and this could consume a third of the average income of an aspiring entrepreneur living in London. These are the wealthy creators who we need to encourage employment. What about ‘poor old granny’ (a cash poor widow) with her property bought with post-tax money years ago? Labour are trying to comfort her by assuring her that when she sells (or dies) they will take the Mansion Tax, plus interest, together with death duties so that her legacy to her children( for them to climb onto the property ladder) will disappear in a ‘puff’ of cynical socialism.
Clearly, they have not thought this through and are so desperate to garner votes that they are indulging themselves in the politics of envy that is the penchant of the Trotskyites.
The Labour Party is looking backwards rather than forwards. They should be rewarding aspiration instead of condemning it.
Given their lamentable past record in government, how can anyone in their right minds vote these people into power? Saints preserve us (The Rev Ian Paisley).