BLOG: Labour’s proposed ‘Mansion Tax’ is unfair
The well-heeled will bemoan Labour’s proposed ‘Masion Tax’ as a ‘rob the rich to help the poor’ levy on all properties with a value of £2m or more. The middle classes are gasping at the re-announcement by Labour of another property tax, itself a regurgitation of a Lib Dem announcement from three years ago. All a bit hickledy piggledy and designed to appeal to the left of the political spectrum at a time of much vote grabbing generally.
But it’s altogether unfair. Home values across the UK vary widely. Indeed they vary considerably within just the same county. A large five bedroom Victorian house in mid-Essex, for example might be worth £1m. Half an hour up the A12 in Halstead, it’s worth half that. Why should one house, the same as another, attract a penalty but the other not?
Of course we can have the debate about ‘rich people deserving to be taxed higher’, higher than the 45 per cent top rate that they doubtless already pay and after the heightened stamp duty that they have forked out on their more expensive purchase too.
Taxing property wealth is the bluntest of instruments. There is often a rift between the value of a property, perhaps owned by a surviving widow or widower or family member. They potentially bear little relation to the amount of money available to them in liquid cash terms.
Tax the bankers and the market speculators perhaps, maybe even more on cigarettes and alcohol? But to increase the financial pressure on someone because of the home that they have worked hard for or have been left with, is just spiteful.
The biggest problem with Mansion Tax potential is who will set the value of each property? How much will the valuation process cost us, the weary tax payer?
What mechanism will be put in place to oversee the appeals process, because there will be many appeals and how much will that also cost?
What will happen if values go down? What measure will be used to prove that decline and over what period will a reduction in cost be scrutinised over before it is ‘accepted’?
A Mansion Tax would be unfair and draconian and not least, just as expensive to collect as any income it brought about.
Russell Quirk is CEO of online estate agent eMoov.co.uk.