View the article online at http://citywire.co.uk/money/article/a659513
'Super tax' would hit second-homers and pensioners
A Liberal Democrat group has proposed new tax rises. Lib Dem Cabinet minister Vince Cable admits some ideas are 'wacky'.
The Liberal Democrat party is putting its weight behind a raft of punitive tax measures including levying national insurance on pensioner incomes, a death tax and a property super tax.
The party has already called for a mansion tax on properties worth over £2 million, an idea which was watered down by the coalition in favour of a 7% stamp duty on homes worth £2 million or more.
However, a party working group is now looking at whether it should back a property ‘super tax’ that would cover all assets, including second homes. The plan for the super tax has been set out in a consultation paper that will be put before the party’s spring conference next month.
Proposals put forward include:
- A mansion tax on properties worth £2 million or more, including taxing those with multiple properties with a cumulative value of over this amount.
- Reducing the annual pension tax relief from £40,000 to £30,000 and the lifetime allowance from £1.25 million to £1 million.
- Introduction of national insurance contributions on pensioners’ earned income.
- Extend the period for gifts becoming exempt for inheritance tax purposes from seven to 15 years.
- Levying capital gains tax when assets are sold after death, currently assets are not liable to CGT when the owner of the assets dies.
- Introduction of a land value tax, including a charge on under-used sites, to try and reduce property prices.
- Reform of council tax to try and differentiate very expensive properties.
- Extend national insurance contributions to benefits in kind.
- Increasing the tax-free personal allowance to £12,000.
There is also a proposal for a net wealth tax – branded a ‘jewellery tax’ but this is unlikely to go ahead and Lib Dem business secretary Vince Cable described it as ‘wacky’ and ‘completely impractical’.
Cable has also played down the proposals, he told Sky News: ‘Some of the [working group’s] ideas are interesting, some are a bit wacky. The idea of taxing jewellery is completely impractical and intrusive. There are ideas in there I’m sure will not get any further.’
Cable also refused to say whether the Lib Dems supported Labour’s plans for a mansion tax to fund a return of the 10p income tax rate.
‘I think the Labour party is playing political games but I’m nonetheless please they’re endorsing [the mansion tax],’ he said.
‘It’s up to them to be statesmanlike and sensible in how they approach it.’
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