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Property rich? Watch out! The mansion tax is coming

Like a horror film villain the proposal for a new swingeing mansion tax just won’t die. Linton Chiswick considers if it's possible to tax property fairly. 

 
Property rich? Watch out! The mansion tax is coming

It’s been beaten up by accountants, attacked by Tory backbenchers, even sat on by Eric Pickles but – like a horror film villain – the proposal for a new swingeing mansion tax to help plug the deficit and punish the property market lottery winners just won’t die.

It’s subtly shape-shifting, too. Its latest incarnation is a form of council tax, collected on new, specially created ‘superbands’ in the UK’s wealthiest suburbs. A Lib Dem policy document suggests the extra revenue could be passed on to poorer councils in more deprived areas, and apparently earmarks 70 places – chosen for their land values – as robust enough to cope with such a tax.

At the heart of this, and of the old mansion tax proposal, is a conundrum. The rich, in times of need, can afford a bit more taxation but what, today, does it mean to be rich? Is it fairer to tax income or another measure of wealth?

An 'envy duty'

Vince Cable and his supporters see taxing income as inherently discouraging, a punishment for working hard. Taxing property wealth, on the other hand, is a way of hitting unearned, undeserved windfalls. Nick Clegg even managed to equate homeownership with tax avoidance, when he told the Telegraph, ‘We will also review how people at the very top seek to avoid taxes and to make sure people at the very top, owners for instance of high-value property, cannot avoid paying their fair share’.

That’s an extraordinary statement. Were you to go out tomorrow and buy a £1.5 million home, you wouldn’t be profiting from an unearned windfall, you’d be spending income that had already been taxed, much of it (it’s okay to assume if you’re buying a £1.5 million home) at 40%. Then you’d be taxed a second time, at 5% (so, to the tune of £75,000) in stamp duty. This is hardly shaping up to be most people’s definition of avoiding paying a fair share. At what point would a further annual tax go beyond fair and become ‘envy duty’?

In Greece, where the government recently announced a temporary two-year property tax of around four Euros a square metre, collected via electricity bills, there’s been widespread consternation, even in the face of national bankruptcy. People hate been taxed on property. It feels intrusive, nosey, nasty. In Greece, it’s been dubbed the ‘monster tax’ by a leading left-wing newspaper.

An administrative nightmare

Like all interesting ethical arguments there are practical issues to this too. There’s a reason why income has traditionally been a primary source of taxation. It’s relatively easy to measure. Wealth, however, and especially property wealth, is something of a movable feast. It’s controversial in its calculation.

Have you ever asked three different estate agents to value your property during a slow market? Its value is dependent on your need to sell it. It’s chronically illiquid (a house that’s been owned by a single pensioner half his or her life and is now worth enough to warrant a punitive tax doesn’t actually provide the cash with which to pay the bill… unless he/she sells, or somehow manages to remortgage, and I can’t see Vince Cable arguing that poorer people should be forced out of larger homes).

The value of a property can go down as well as up; so should homeowners be able to claim property losses as a taxable expense during a falling market? There’s also the issue of fiscal drag. Can we trust a government to shift the thresholds to keep in step with the realities of the market? Not if we take stamp duty as an example, we can’t.

It would turn into an administrative nightmare, too, with thousands of appeals from people falling just across value thresholds.

Is there a fairer way?

Eric Pickles appeared to have ruled out a mansion tax at the end of August, but – as the Lib Dems hunker down and discuss the demands that will shape the second half of the coalition’s government – there’s a sense that an enthusiasm for some kind of wealth tax (and property is the UK’s primary wealth) isn’t going to go away.

Is there a way of doing this that might be fairer? Possibly. But it’s still ugly. If Cable and Clegg are serious about shifting the burden of extra taxation from income to unearned windfall, then the obvious answer is to take a closer look at capital gains tax on principal homes, perhaps abolishing stamp duty and loading the entire burden onto sales.

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73 comments so far. Why not have your say?

James Carter

Sep 15, 2011 at 09:37

Excellent article. As you say how can any government be trusted to administer this when Stamp duty is such a shambles.

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Paul Scott

Sep 15, 2011 at 11:05

A mansion tax instead of 50% top rate sounds a very sensible trade-off to me. They should just get on with it, before 50% does any more damage to the UK economy.

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Anonymous 1 needed this 'off the record'

Sep 15, 2011 at 11:17

Why are we increasing taxes...... the only way we will have sustainable growth is with the reduction of taxes...... although the Central Bankers would not want that........ bet they hoping that Labour will soon be back as stripping the wealth of the country is much easier with them as they do not understand what is going on.....

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Steven22

Sep 15, 2011 at 12:01

Just a correction - according to LibDem, the tax is levied on what is excess of the threshold. So, a 5% tax on £1.5m with a 1m threshold is 1.5 - 1 = £500k x 5% = £25k, not £75k !

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Jack Porter

Sep 15, 2011 at 12:06

We already have a wealth tax - even though to some it seems to be discretionary. It is called Inheritance Tax. if any government sincerely think that it is appropriate to levy a charge against property, then they can wait until the owner(s) die. It is the those obtaining the Inheritance who have not wot worked for it - usually.

So much for Conservative values...Ha Ha Ha

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Linton Chiswick

Sep 15, 2011 at 12:07

Thanks Steven22, but if you look again you'll see that I'm clearly referring to stamp duty. - L

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howie

Sep 15, 2011 at 12:12

its easy to value a two up two down

but sometimes impossible to value a mansion

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Constance Blackwell

Sep 15, 2011 at 12:14

iti s tempting to have a profit on capital gains in property - one caveat -

when the owner is over 60 and selling property to fund retirement there should be some way that they would be exempt from such a tax

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sam chambers

Sep 15, 2011 at 12:19

if you introduce a sales tax on houses as opposed to stamp duty, what about those who have already paid stamp duty when buying?

But the real stupidty of a sales tax comes down to this - how many houses are bought entirely with cash? The vast majroity will be bought with a mortage so what happens if the sales price is the same as the mortage? where does the homeowner find the cash from to pay the tax?

As equity is more often than not used as a deposit for the next house this tax will simply is make moving even less attractive and thus push prices lower.

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Roger Hopson

Sep 15, 2011 at 12:21

All we seem to hear from this government is tax, tax, and more tax. They are worse than the last lot!

It is generally recognised that to simplify the tax structure and reduce tax overall will generate the growth that we need to reduce the debt. Continually bashing people round the head with even more taxes will not.

This suggested mansion tax will be an administrative nightmare, and full of anomalies because of the subjective nature of the value of a property. There would be thousands of additional public sector workers needed to apply it. So much for the government trying to reduce the public sector.

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Michael Dangoor

Sep 15, 2011 at 12:24

Not everyone owning a house worth over 1 million is necessarily wealthy. With their mortgage their net worth could be very little.

If the coalition want to bring in a property tax the fairest way to do that is to tax the capital gains when you trade down or leave the property market. If you are just changing homes you get rollover relief.

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Christopher Roberts

Sep 15, 2011 at 12:38

what this government should do is put in place an incomes policy for everyone who works in the public sector such that no one earns more than the prime minister. It would get rid of some of the council fat cats!!

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Anonymous 2 needed this 'off the record'

Sep 15, 2011 at 12:56

By saying "..cannot avoid paying their fair share’" surely Clegg meant closing loopholes where SDLT is avoided - I read that nearly all the owners of 1 Hyde Park bought via a company so when the flat is sold the company shares are sold, so no SDLT - stop this loophole and that's enough surely. get all the benefits system, lands registry and all that lot integrated and stop all these benefit scroungers ...and while I'm on about it come out on STRIKE against the Unions and their strikes in November - how cam a mere human say enough is enough with fat cat unions and their members !

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Murdo McSponge

Sep 15, 2011 at 13:10

Spot on Mr Roberts. Hit the top earning civil servants who have made such an appalling job of running the Country for the last 50 years. Hit the b**tards as hard as possible. It is their self-interested "Sir Humphrey" type of conniving together to pervert the way things should be made to work in the interests of society, that have contributed to getting us into this position. Them and labour!

Murdo

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nickle

Sep 15, 2011 at 13:21

New taxes. Guaranteed to solve any financial woes, boils, scrofula, leprosy and any general malaise.

When will the idiots realise that tax is the problem, no the solution.

Time for taxpayers to be given the right to strike over paying taxes.

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Hotrod

Sep 15, 2011 at 13:43

What puzzles me is the definition of a taxable property, and the person who is deemed responsible to pay the tax.

If for example you are the sole owner of a detached residence with freehold title, the answer is clear cut and indisputable, because the property cannot be sequestrated by anyone else. Never-the-less a property which falls into this catergory could be realistically valued at only £50,000, if it stands in a blighted area.

On the other hand a married couple wishing to acquire a lease (with the help of a mortgage) on a luxury flat in a desirable part of London would have to pay several million pounds for the privilege. But what do they actually own? In my estimation, precisely nothing. For a start, their right to live in it can be taken from them, if they fail to pay the mortage+ground rent+service charges, or any one of these three.

Secondly in simplistic terms the reversionary valuation is a depreciating asset, because the lease will eventually expire worthless.

If you take a boat trip along the grand union canal towards Camden Lock you will see some prime examples of what I mean. Some very large properties have been built there, in a style that I would define as "Mansions" but the people who paid for them to be built, and are classed as the rightful "owners" don't own a square inch of the land on which they stand, it belongs to the Crown Estates.

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S M

Sep 15, 2011 at 13:59

Its one of the coalition's better ideas and they should get on with it.

Unlike income tax, which penalises hard work, a Mansion Tax creates a revenue from a windfall, often taxpayer inspired.

Its very difficult to avoid, unlike income tax.

It would hit the wealthy SE & London, which is fine

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Far2go

Sep 15, 2011 at 14:06

Yet again our politicians scheming on how they can get their sticky fingers into our pockets for more money.

Why?

Because they are too bone idle to think about how they can run the country more efficiently and because the bigger their budget (of our money) the bigger their ego.

Lets face it, if they were good at running things efficiently they would be running successful companies. Politicians have no place running anything and they certainly should not be in charge of raising money. Their budget should be set externally (by us?) and at the very least be frozen. If they can’t cope with what they are given, they should be put up for re election.

As for a mansion tax?

I can hear them now “Let’s just get this tax in! It doesn’t matter at what level; even if it’s £100 Million, JUST GET IT IN – we can fiddle with the levels later”.

Did they not learn about the window tax? Do they not think that people can manipulate the values of their properties? Let the gardens get over run, let the paintwork peel, get your sons mates to squat, go tenants in common with a dozen others who live abroad. People who have run successful companies and earned money legitimately are far cleverer at dodging taxes than politicians who have never earned a penny.

When are they ever going to learn that when you reduce the tax rate, you increase the tax take.

Rant over, back to looking for a job. Sigh!

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S M

Sep 15, 2011 at 14:19

One of the coalitions better ideas, just get on with it.

Whereas income tax hits the youngest hardest and impacts hard work, a Mansion tax creates a revenue from a windfall, often taxpayer initiated.

It also helps that most of these places are in the wealthiest part of the UK, namely London & the SE.

Unlike income tax its very dificult to avoid by bankers and other people of means

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Powerful Pierre

Sep 15, 2011 at 14:41

Good article. The LibDem proposition is unfair and illogical, as it seems to ignore the difference between revenue and capital. Many people (e.g. empty nesters, pensioners ...) find themselves in large houses which have appreciated in value but they have limited income - so are not in a position to pay yet more tax. Far better to tax income, as those with high income can (by definition) afford to pay more tax.

The same applies to council tax and road fund tax. Why should council tax be linked to the size of a house, regardless of whether one person or ten people live in it, and accordingly consume fewer or more public services? Tax the consumption! Why should the owner of a car which theoretically emits high levels of CO2 be taxed hugely, when the car is driven just a few hundred miles a year, thus emitting little CO2? Tax the fuel/usage!

Revenue and capital - they're different and should be taxed accordingly.

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David L

Sep 15, 2011 at 14:56

I can only asume that those who talk about an "taxpayer inspired windfall" are inspired solely by envy, closet communists or intellectually challenged. I bought my, admittedly substantial, house 2 years ago from my earned and (heavily) taxed income - no windfall there and certainly not at the expense of the taxpayer. Its fallen in value, which is unfortunate as it represents just about my entire accumulated wealth after a lifetime of hard work. Whats fair about taxing me again on this, my family home?

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Jack Porter

Sep 15, 2011 at 15:16

I watch Location, Location regularyl. I have noted that wonderful properties are for sale in Shropshire etc for prices which would hardly buy a 2-bedroom flat in London. Similar differentials are everywhere.

Are we to be penalised for living in a nice part of the country BUT within striking distance of London?

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Smithy

Sep 15, 2011 at 15:23

At what level would a house class as a 'Mansion'? There are quite a few houses in South Bucks where I live that don't look like much but are probably worth £1m or more. Unfortunately, mine is not one of them - sadly, far from it. And how much would be collected via this new tax? How much would it cost to collect it?

I agree with the comments about bloated Councils and Central Government. Confucius said: "Governing a country is like frying a small fish - you must not over cook it". Unfortunately the last lot thoroughly cooked us and the current government are now attempting to re-hydrate a burnt kipper.

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Mombers

Sep 15, 2011 at 15:27

'There’s a reason why income has traditionally been a primary source of taxation. It’s relatively easy to measure'

I'm afraid that that's not true. You cannot measure cash in hand work - illegal but widespread. You cannot measure interest income in tax havens (although a great deal of resources have been thrown at this). Very hard to measure if someone is letting a room in their house above the Rent-A-Room exemption.

Property on the other hand is so easy to value, every article in the Daily Mail ever fails to mention the exact value of the house that asylum seekers/a footballer/other scapegoat is living in. Many countries inthe world have property taxes, it's not rocket science.

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Mombers

Sep 15, 2011 at 15:48

@Constance Blackwell

Presumably this exemption should apply to any asset being sold to fund retirement? Can't see a reason why a lifelong renter selling his plumbing business should get whacked at least 10% CGT on the value he created himself while the owner occupier whose land price windfall has nothing to do with his personal effort gets taxed 0%

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Steve_T

Sep 15, 2011 at 16:02

Well said David L

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Peter Thoresen

Sep 15, 2011 at 17:15

A properly constructed wealth tax is just what we need. The very wealthy, and their companies, pay little or no tax, whilst the majority of us get taxed to the hilt via income tax. Most of the 'Wealthy' don't have 'Income' to be taxed!

The 'Too big to fail' banks are at the heart of our current economic malaise, and it's going to get worse. All these tax debates are a side issue: the government needs to get to grips with Fractional Reserve Banking and the return to some sort of currency linked to a gold standard. Instead, they expect the bulk of us to just fund their over-spending and keep bailing out the banks through cuts and taxes.

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Chartered Accountant

Sep 15, 2011 at 18:38

In effect we are already paying property taxes in the form of taxes on Buildings Insurance.

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Anonymous 3 needed this 'off the record'

Sep 15, 2011 at 19:25

"the fairest way to do that is to tax the capital gains when you trade down or leave the property market."

We have a tax for when most people leave the property market, it's called inheritance tax.

Privately Labour and the Conservatives will concede the local income tax idea is the fairest and logical way to replace Council Tax, but they have a problem. When the LibDems proposed it in 2005 they trashed the idea and it was such a succesful trashing that the LibDem dropped the policy themselves for 2010. But more and more people I talk to say it can't be put back on the agenda because of what was said about it in the 2005 election, but they wish they could.

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Chris B (Slough UK)

Sep 15, 2011 at 20:00

I disagree with all property taxes, people have to be allowed to live. Just because a person owns a mansion, doesn't mean they have an overflowing bank account.

Once again I feel that somehow, it is our government we need to get under control. They are fixated on creaming every last penny out of the people and then wasting it all on things like the fantasy war on terror.

They can switch on Quantitative Easing in the blink of an eye, but when it comes to regulating the banks we have to wait 8 years for a solution which will probably never happed. This arrogant duplicitous hypocrisy that they weild over the people will drag us all down.

Whilst they keep telling us that they have inherited an awful mess from labour; which is true, the phrase is now very hackneyed in the light of the coalitions many failures. Cameron giving away 650 Million pounds to Pakistan for so-called school building, simply insane. Spending £1 Billion on 14 helicopters, when we are supposed be fighting for our economic survival, insane. There is most probably a whole list of reckless spending that we don't even know about. Not only is the government not acting in the best interests of the people, but they are casting us all into the depths of poverty. Yet government spending still remains at eye wateringly high record levels.

The cost of Iraq and Afghanistan wars so far around £22 Billion+ and what have we got for that? Less than nothing and a more destabilised world.

Besides the relatively low casualties of our own brave troops, 100s of thousands of Iraqis and Afghanistanees killed and many times that in maiming of people. The US has spent $5 Trillion+ on the wars whilst 55% of the people's taxes go to the military...insane.

If we as a country have no control over the actions of our governments and they are unaccountable for making unjustifiable wars and generally wasting billions then what hope is there for us all?

Sure they can pump billions into the system and maybe that makes the markets go up for a short while, but ultimately we need a system that works and doesn't strangle the very people they are supposed to be serving through taxation and currency debasement.

Countries that have low taxation levels have thriving economies. It should also be remembered that when it comes to VAT, people have already been taxed on their earnings. Taxation is in effect legalised theft, the government does nothing to earn the tax, it just takes it because it forcibly can. Then they spend it all (and more) on anything they decide, good or bad.

It would seem we have no choice but to let our leaders continue taking us on the road to hell. Perhaps when we get there, things will start to change??? Don't hold your breath though.

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nickle

Sep 15, 2011 at 20:19

Surprisingly large number of people want penal taxes on southerns.

So how about a whippet and ferret tax. Known to solve all known ills, including Scrofula and bad luck with the ladies.

Here's another suggestion. We now have taxes that first time buyers in particular have to borrow in order to pay, stamp duty.

So lets tax credit ratings. The better your credit rating, the more you get taxed using this new credit tax (because you're worth it etc). Then they can borrow the money. That frees up the states budget, who can now borrow even more vast sums, in order to spend it because people aren't spending [that they aren't spending because the government is taxing them too highly doesn't occur]

It's simple. The problem is we are over taxed. Allow people to keep their own money and fruits of their efforts, and they will generate more if it.

Taxes are the problem, either current or the inevitable to pay the debts, not the solution.

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Anonymous 4 needed this 'off the record'

Sep 15, 2011 at 21:04

what about all the btl millions that are not paying there wealth taxs .if all the loop holes were shut first this tax would not sound so bad. I bet the death duties of the wealthy soon get hidden before they get paid even years before to hide it. land should be shared out on death or less than 10% of the people will hold all the land even companys. that would then need a revolution to get it back and nobody wants that. look the rich or the well off look for loop holes to avoid tax the pay as you earn cant so no wonder people get pissed with the rich

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nickle

Sep 15, 2011 at 23:17

Tax any business and it gets passed on to the customer, the shareholders get poorer, or it goes bust.

Which one do you want?

Renters made poorer?

People looking to retire made poorer?

Council taxes going up? Under EU law you cannot give special treatment to one section (councils and housing associations) against BTL

Or do you want to see lots of property being dumped on the market, and vast numbers of people just trying to buy their homes in negative equity?

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Rose G

Sep 16, 2011 at 11:04

How about the many foreign purchases of property in the Uk who do not pay taxes in the UK? Park Lane is mainly owned by the sheiks with their oil money - what taxes are they paying when they purchase their properties?

For those with more than 1 home, taxes should be introduced so that firt time buyers are not out priced. Buy to lets should also incur more costs, not less!

If we are to introduce policies which encourage first time buyers with good deposits, maybe the price of houses would be more realistic?

I do believe that the millionaires who own vast areas for their own use, should pay extra for that privilege. We are supposed to be in this together, remember!

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In the Dark

Sep 16, 2011 at 11:56

Ah, the politics of 'ENVY'. Becoming wealthy is not an easy venture and rewarding one's self with a nice house for the all the hard work, well is just show boating in the extreme, is it not!

I do believe that yet again Government is only interested in its self fulfilment. It proclaims that in the form of a Mansion Tax, it allures that people, in their opinion who have vast wealth, will pay this modest tax.

Yet reality will dictate that it will affect us all just like the hideous Council Tax.

Government should cost no more than 30% GDP, the future is bright if the future is wealth creation, by the people for the people.

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Rob Moore

Sep 16, 2011 at 12:57

LAND VALUE TAX. Why not just say it? It really would solve the problem and what I can't get my head around is why the 60 million poor to average people don't unite against the 5 million rich and ultra-rich to put it in place. It must be because the 60 million are so busy working their fingers to the bone to make rich people richer that they can't even think about anything else. Meanwhile the 5 million rich and ultra-rich have all the time in the world to dream up new and inventive ways to screw money and wealth out of the rest. If that's not an accurate description of the sub-text of our society then shoot me down.

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S M

Sep 16, 2011 at 13:02

Most of the SE gains are a complete and utter windfall.

On the back of unfettered immigration, taxpayer investment and planning laws that benefit landowners, with large portfolios.

The point about rich foreign house owners is a good one, many make little contribution to the country and don't pay their taxes here. Get at them through a property tax. They cannot avoid it. Have property pay the tax.

We should take lot more of the 'little people 'out of unfair income tax

That would make big hole in the benefits and credits industry

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Anonymous 4 needed this 'off the record'

Sep 16, 2011 at 14:12

lets look at looking after your own interests when in power. watch the panel reaction on question time on bbc i player when mps are asked to give up the same amount of pension as the general public. lead by example what bull sh--

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THOMAS EAVES

Sep 16, 2011 at 15:11

I assume the tax applies only to any single property over the threshold.

Not a portfolio in excess of it..

Can anyone confirm this

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Red Tango

Sep 17, 2011 at 09:35

I have bought 4 large properties in past three years out of heavily taxed income paying stamp duty as well. Bring it on and I pack my bags and move to another country taking the several millions of tax I paid in the same period.

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Anonymous 5 needed this 'off the record'

Sep 17, 2011 at 20:56

I think there is a simple way of applying a mansion tax.

Referring back to Chartered Accountant post, beef up the taxes on buildings insurance on a progressive basis, to be collected by Insurance companies on behalf of HMRC.. Use Insurance valuations above £1m say, #

£1m-£1.1taxed at say 1%, £0.1m,

£1.1m -£1.2m taxed at 1% on the first 0.1£m and 2% on the next 0.1m,

then on 1.3m, first £0.1 m on 1%, next 0.1 m on 2% and next £0.1m on 3%, and then continuing increases to 4%, 5% to say a maximum of 10%.

Simple, effective, does not require valuations and lots of staff to administer, easy to collect.

Fair and reasonable?

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nickle

Sep 17, 2011 at 21:20

Fair? No.

Why should people who work hard be penalised but those who don't work reap the rewards.

There are people on benefits in London living in property that would attract the liberals Mansion tax, pulling down 130-150K a year in benefits.

Why to the Liberals need a mansion tax?

To afford to pay these oiks to live in mansion.

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Franco

Sep 17, 2011 at 21:30

Statements to the effect that high earnings are due to working hard are so inherently stupid, I refuse to even listen to the idiots who made it after that.

You can work 16 hrs a day until you drop and in 99% of the jobs and you might make £700 a week instead of £300. That is peanuts. Bankers get £2 mln a year bonuses (£40,0000pw) by working no more than any other traders. Doctors get £200,000 a year,£3,800 pw by working no harder than other scientists or professional engineers who earn 4-5 times less. The good restaurants in London are full every evening with people spending £150 for a meal. Do you think they are plumbers who work overtime? People can be stupid, but not so stupid.

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Anonymous 5 needed this 'off the record'

Sep 17, 2011 at 21:55

nickle

I think it is fair, but can be made fairer by paying it out of benefits, in the few cases your scenario might arise.

Prof Eman

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Franco

Sep 17, 2011 at 22:03

In this country there seems to be a constant search to find new ways to tax people, but without a corresponding reduction some where else.

A tax on wealthy people should only be discussed if it will mean an equal reduction of tax on poorer people. Why does some one not propose cutting the war/armaments budget instead? Other countries manage with far less. We can obliterate the world in one day with the Trident, but we need the French and Italians to help us find aeroplanes for Libya. It makes our PM feel important to be able to dictate and bully other countries, but I had rather pay less tax. And when some one wants to start another Afghanistan and Iraq let him go and fight and let him and his ilk finance it too.

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nickle

Sep 17, 2011 at 22:12

People have lost the connection between why taxation exists.

Look back through the comments and its taxation for the sake of taxation.

It's taxation that other's pay and not yourself.

It's taxation that penalizes creation of wealth.

It's taxation that has a negative effect on jobs.

Very few people can create jobs. Most are employed, rather than employers.

Hit those that create jobs, and the rest are up the proverbial creek.

What's a five a day adviser going to do in the real world?

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Graham Barlow

Sep 19, 2011 at 16:44

I have been saying for some time now Britain is becoming a very unfriendly place to reside ,unless you have nothing then it is the scroungers paradise. The Liberal Dems Party is full of very peculiar people who would have you believe that what is yours is also at the disposal of the Government, . Politicians live by interfering in everyone else's life and helping themselves to the sweat of other's hardwork. My advice to youngsters is to start looking around the world for a regime that rewards hardwork, and encourages people to go into business. Not like Euro land, the land of the busybody.

Yesterday I heard from a heavy goods vehicle driver that he was stopped for a vehicle check yesterday ,his vehicle was practically brand new delivered just a few months before. The Ministry went all over the vehicle taking nearly 2 hours checking every nut and bolt. They could find absolutely nothing wrong. All clear they said but you cant go yet because you have a 5 inch Teddy Bear on the dash board of the Cab therefore we are Fining you £60. . Doesnt matter who it belongs to you must not have anything near the 6 foot wide windscreen. This sort of officious attitude does more harm to working peoples ' industry than could be imagined. I believe it is all about money ,another £60 in the kitty. Just like the speed Camera, which turned out to be a Government fund raiser , rather than a safety improvement.

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Anonymous 4 needed this 'off the record'

Sep 20, 2011 at 17:29

these goverments dont listen to the working man any way or the borders would have been shut 10 years ago then we might not have the property shortages that made the property boom with windfalls for the rich or buy to let investers who bought up all the cheap property in good ares. but then we still have not learnt to sort the over crowded country out. people keep blaming the public sector for the need for property taxes but its the numty leaders who made the none jobs

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Rijswijk

Sep 23, 2011 at 20:11

In the proposals, is one allowed to deduct the mortgage first? If one "owns" a house of say 2.5m and it is mortaged with 2.0m a mansion tax on the full 2.5-1.0[treshold]=1.5 would come down hard, as the buyers "richness" is only the 0.5m down payment.

Of course, the first thing that will happen is that prices of more expensive houses will drop considerably towards the treshold, making the tax much less effective.

A yearly tax on a static posession like one's house or bank account feels just very unfair. Because after a number of years *all* will be confiscated.

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nickle

Sep 23, 2011 at 20:17

No, just like stamp duty they will do you for the full amount.

The government is desperate for cash.

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Hotrod

Sep 24, 2011 at 08:48

Rijswijk's comment is precisely the point I was trying to make.

Council Tax, or the proposed mansion tax is inherently unfair and the basis for its calculation is entirely fictional.

Property values and the occupiers equity in them are universally variable. The only real reason for its adoption would be the enforcement of payment.

As has been noted above, the real wealth of country is concentrated into very few hands. If you analise the hard facts you find that very little has changed since Feudal times. When you drill down to who owns more than a thousand acres of agricultural land and/or five acres of urban land you then discover who actually owns the real wealth of the country and its income potential, (They number very few people indeed.)

In theory modest increases in tax from their cashflows should be able to make up the shortfall in Govt. expenditure.

But, as previously mentioned, people with that sort of clout ensure that their wealth is protected in perpetuity, through company law, trusts, heirlooms, offshore havens, non-domiciled status and every other tax dodge going.

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normski

Sep 24, 2011 at 15:45

Graham barlows posting is spot on and I too encourage youngsters to look around the world.

The governments has bled people white with income tax which is now becoming harder to collect. They are now turning their attention to assets which are easier to collect.

Lorna burke on another posting wonders why landlords are seelling property ?

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Jo Public

Sep 28, 2011 at 09:50

Eric Pickles really blew it for us middle class types by opposing the mansion tax on the grounds that "the middle class already pay enough tax". Quite simply, WE DON'T OWN MANSIONS! Mansions are owned by people who are too rich to pay normal taxes like the rest of us, because they are domiciled in Belize or Monaco or whatever. This would probably be the only tax they can't avoid paying, and if he wants to "rule it out" at a time like this Eric must be living in a different economy to the rest of us.

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Paul Sanders via mobile

Mar 03, 2012 at 22:42

It would be fairer to tax all luxury goods than to have a mansion tax. The buyer can then make a decision each time at the point of purchase as to whether he/she can afford the item. It would obviously then follow that the more you buy the more tax you would pay and this would also therefore be proportional to earnings. Everyday items would not attract any tax making it fairer on low income groups.

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Constance Blackwell

Mar 04, 2012 at 09:08

a mansion tax has real merit - there is hot money in London buying up property - - these people with their hot money are not paying UK taxes - the way to get them is with a mansion tax - but it may be that 2,000,000 valuation is too low - but something closer to 3,000,000 ought to be the correct number -

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Prof Eman

Mar 04, 2012 at 09:26

Paul Sanders

An increased tax on luxury expensive items would mean people in UK avoid it by buying abroad e.g. luxury cars in Belgium and similar.

The beauty of mansion tax is it cannot be avoided, you cannot transport your house abroad to avoid the tax.

There are definitely merits in this approach.

The only thing that is really worthy of discussion is the level at which it should be set, as per Constance Blackwell suggestion?

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Michael Dangoor

Mar 04, 2012 at 10:03

The reason the mansion tax is not happening is because the way it is being proposed is impracticable. If your house is worth 1.95m you would pay nothing and if it is worth 2m then you would pay 20,000 per annum.That is ridiculous.It is like saying that if your income is under 100,000 you pay no tax but if it is 100,000 you pay 40,0000. The other anomaly is that someone with a 2m house and mortgage can be worth much less than someone with a 500,000 house.

The only way that a mansion tax can be applied fairly is to charge it from a low level and increasing the rate progressively- no tax on first 250k,0.25% the amount to 1m,0.5% on the amount to 2m and 1% on the amount above 2m. This should be a tax not just targetting the rich but part of the process to transfer income tax to capital tax

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Steven22

Mar 04, 2012 at 10:14

@Michael,

That is not the mansion tax that is being proposed. It is a marginal tax at value above the threshold. e.g. 1% tax will be £1k for a property of the price of £2.1m with £2m threshold.

Mansion tax is not stamp duty.

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Martin Drew

Mar 04, 2012 at 10:19

Another problem with the mansion tax is that not all those who live in mansions have much cash. I understand that even in The Boltons, where houses can now cost up to £45 million, there are houses that were inherited years ago and are lived in by elderly people who really aren't rich by any standards other than property. If it isn't fair to force people to move to smaller council flats because they no longer need 3 or 4 bedrooms then neither is it fair to force an elderly couple to sell their family home because through no fault of theirs the surrounding houses are being sold for enormous sums and as a result they are being forced to pay a mansion tax.

If it is going to be levied it has to be based on what people paid for a property, or what is was declared as being worth at the time it was inherited.

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Prof Eman

Mar 04, 2012 at 10:24

Michael Dangoor.

Some sort of banding, say on the lines of council tax could be used.

One could argue that there is justification for it. Please read

BBC News UK - Charities 'could face cuts of up to 5.5b'

www.bbc.co.uk/news/uk-17249026

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Prof Eman

Mar 04, 2012 at 11:05

Some exemptions for the elderly property rich could be operated.

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Constance Blackwell

Mar 04, 2012 at 11:58

Good point - by Prof Eman - in the many American cities there is no allowance

for elderly people whose property has appreciated in value - to such an extent they can no longer pay the taxes on their home - many retired - retire into doing important community service - this has to be preserved -

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nickle

Mar 04, 2012 at 12:17

Interesting isn't it..

All the comments are that taxation is the aim. ie. Almost all the posters here are out to take money off other people, and that is what they want.

Not one peep about taxation being a price for services, and whether paying that price is a good thing or not.

ie. Should the NHS cost 1,900 a year, or 10,000 a year?

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Michael Dangoor

Mar 04, 2012 at 12:49

Steven22

I stand corrected on the way the mansion tax is supposed to be charged - and relieved.

Anyway I would prefer a tax on the gain in home sale when you trade down or exit the market. If you buy another home you would get rollover relief.

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Constance Blackwell

Mar 04, 2012 at 13:02

capital gains on homes is a completely different issue - I would add a caviat on that - for older people who have lived in their home and have to move on retirement a capital gains tax is punitive - (if one is necessary again it should be banded - so a tax is only payable on a house above a certain value) -

One more point however many homes and apartments are bought in a company name - they should not be exempt from tax -

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Hotrod

Mar 04, 2012 at 13:09

Glad to see a revival of this debate, since the budget is barely three weeks away.

We must remember that "mansion tax" is Vince Cable's baby. I don't think George Osborne is likely to foster it and push it about in a pram'

Secondly, what constitutes a "mansion" ? In my opinion It is not something which could be clearly and indesputably defined.

e.g. how do you take into account leasehold property, with reversionary ground rent and service charges. It would seem to me that the "occupation value" of such properties could vary widely from year to year.

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nickle

Mar 04, 2012 at 13:15

It's double taxation, and in lots of cases the government is having 5 bites at the cherry.

1 Taxation on income

2 Taxation on investment return

3. Taxation on expenditure improving the investment

4. Capital gains tax

5. Inheritance tax.

There is a huge disconnect between the services provided and the cost of those services.

Governments try and hide the cost of its services, because if people were charged the full amount up front, they would say, no, its not economical, its bonkers.

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Mombers

Mar 04, 2012 at 13:42

The really important thing to remember here is that taxes on work, profits and turnover cause higher unemployment, whereas taxes on property do not. So if we decide as a society that it is more important for a select few to consume as much housing as they like at the expense of higher unemployment, we need to accept the consequences.

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nickle

Mar 04, 2012 at 14:17

Sorry Mombers, but that's bonkers.

All taxes cause higher unemployment. It results in money being wasted because governments destroy value.,

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Mombers

Mar 04, 2012 at 14:54

Nickle, you need to back up sweeping statements like that. How do low tax, poor standard of living countries like Mexico and Somalia fit into this model? And the other end of the scale, Scandinavia. There's no way to avoid public expenditure if you want civilisation. The question is, how do you raise taxes in the least damaging way? If a company can employ someone profitably a £x, but income tax and NI require more than that, the job is destroyed. Ditto VAT. A tax on land has to be paid regardless of income or profits (like rent) so it does not destroy the supply of labour or profits.

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Andy Mann

Feb 18, 2013 at 13:43

The cost of bailing out failed UK banks and financial institutions is not yet clear but it ranges from £2,000 to £12,000 for every person in the UK. The treasury's got to get the money from somewhere and wealth / mansion tax is is what the LibDems propose - a police state masquerading as philanthropism.

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nickle

Feb 18, 2013 at 13:52

No its not.

30 bn share loss - no the banks - Gordon.

35 bn profit on penal rates of interest

220 bn of other taxes from the banks over 4 years.

Where's the loss?

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nickle

Feb 18, 2013 at 13:55

There's no way to avoid public expenditure if you want civilisation.

==============

So look at what the state has done to people.

5,300 bn of debt for the state pension, with no realizable assets

1,100 bn of gilt debt, with no realizable assets

...

7,000 bn plus of debt. 550 bn of taxes. 700 bn of spending. They are bankrupt.

That's why the OBR says its less than 50% chance they pay the state pensions.

Now if a 26K a year worker had invested their NI, they would have a fund of 560,000 pounds. State pension costs less than 130,000.

430,000 stolen from some who is hardly rich.

Can you live off 5K a year? Are you rich as a result? Nope, you a poor. The end result of the state's actions.

So what was it again about the state being civilised when its stolen 430K from someone earning 26K?

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