Fri 11 Apr 2014
The threat of a misguided mansion tax on homes over a certain value remains part of an ill conceived plan to satisfy a floating vote perceived to be motivated by envy.
It is a clumsy proposal. It is dependant on an arbitrary value that bears no relation to the ability of the home owner to pay it. A single elderly widow on minimum earnings will be asked to pay this tax, if her home happens to be valued in excess of a certain amount.
Like Stamp Duty Land Tax this will be a tax on those living in the south east of the country, where most such 'mansions' exist. But these 'mansions' are not what we all think of as mansions, they are all those houses valued at more than £2m. So in Fulham a two bedroom flat could be classed as a Mansion.
This iniquitous proposal ignores the fact that many larger homes accommodate adult offspring unable to afford a home of their own, and if under 25, unable to obtain housing benefit. They may also accommodate staff or lodgers enjoying low housing costs without the need for state subsidy, or they may be the refuge of the single elderly wishing to spend their final years with their family. These homes accommodate more than one household. They are not the residences of the rich.
There are those who suggest that a moderate tax on wealth would have little effect. Why, we hear them say, is it any different from Council tax? The council tax levied by local authorities is paid for services. Mansion tax is just that, an additional tax levied against the value of a principal private residence on the purely arbitrary basis of the value ascribed to it. It is a wealth tax that has no regard to income whatever.
It is a tax on aspiration that will see successful home buyers choosing to buy their luxury homes in the United States or Dubai rather than UK. These are countries where success is encouraged and rewarded by an ability to buy a super home without envy and the imposition of annual taxes on houses over arbitrary values.
It is a tax that will distort housing markets. With the lower end markets receiving the stimulus of help to buy, upper end is to be heavily taxed with the current 7% SDLT on transactions and an annual tax in addition. The economic benefits of house building apply to all housing markets. Material supply chains and specialist sub contractors for high end housing are just as important as those for affordable housing and can help to continue the momentum that is gaining ground in housing.
Housing markets are moving, and with them will be an economic recovery based on a greater consumer demand for associated goods and services. Envy has no part in this recovery.