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'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'. 

 
'Super tax' would hit second-homers and pensioners

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.’

74 comments so far. Why not have your say?

Sam De Zoysa

Feb 18, 2013 at 13:03

I have no problem with any tax raising ideas "wacky" or otherwise being floated. What breaks my heart is that there appears to be no nuance, no rationale beyond "soak the rich".

Our productive economy is simply an aggregation of wealth creators. Confiscate too much from them and those meen and women might be disinclined to "create."

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Clive B

Feb 18, 2013 at 13:25

Agree with Sam above.

When I hear remarks like "the rich need to pay their share" or "broad shoulders should burden the load".....I have never heard such people state at what point this would stop.

Are such people suggesting we keep taxing the rich more until they have no more than us (whoever the "us" are). If so, where's the incentive to work harder ?

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Matthew Charles Flinders

Feb 18, 2013 at 14:02

While this is a popular theory personally i think its nonsense, for EG our super tax is slightly higher or above the average for EG Europe will that reduce the incentive for entrepreneurs to become succesful? No. Alot of wealth creators are driven by more then just the need for cold hard cash. Sure, there are those who create a business purely to get stinking rich and i'm sure they'll be the first to hire an amazing tax accountant to save as much money as they can through various legitimate tax loopholes etc. Is anyone really going to move abroad to avoid a meager tax % increase. Surely very few people are that selfish.

Laffer curve is always going to exist, so why worry about setting progressive tax too high.

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Keith Cobby

Feb 18, 2013 at 14:02

I bet they are laughing in Singapore, Hong Kong and Shanghai.

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P L

Feb 18, 2013 at 14:06

The LibDems are completely daft. I don't think they appreciate that the mention of these sorts of ideas can be enough to make investor think twice and not bother with the Uk

You go to work, earn £1000, a third is taken in tax.

You spend it and a fifth of what you spend is taken in tax.

You save the rest and any gain that might protect you against inflation is again taxed.

You die and they take two fifths in tax.

,,, and now they want to tax you when you don't spend it.

I'll add to their list

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jeffian

Feb 18, 2013 at 14:50

The trouble with taxing assets rather than income is, how does the taxpayer actually find the cash to pay? By chance, the London house which I have lived in for the past 33 years - cost £75k - would now probably put me into the 'mansion tax' bracket. I'm now retired with an annuity of around £30k and some investment income on which I pay the usual income tax, so where would I find the additional £20k from net income and what marginal rate of income tax would that actually represent?! It's even worse for assets like paintings or jewellery which are incapable of earning a return.

As for the comments about making the 'rich' pay there fair share, it has obviously escaped the notice of the politicians that the top 5% already pay most of the tax, the top 25% pay pretty well all of it and vast swathes at the bottom pay little or none (which is as it should be). This probably reflects the fact that politicians bribe the voters with their own money to get elected and it is easy to garner support from those who pay in the least and receive the most from the state.

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jeffian

Feb 18, 2013 at 14:53

Oops! I meant "their" fair share. Where's an edit button when you need one?

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David West

Feb 18, 2013 at 15:27

We are already over taxed in the UK. I voted Lib Dem in 2010 but this is just one more reason not to do so in 2015. National Insurance contributions on pensions is pure greed. I am retired and can just about manage on my pension. Where are these people coming from? They obviously cannot see above grab, grab grab. The problem is that the Lib Dems may be in power with Labour after the next election. Labour has always left our economy in dire straits after every time they have been in power. Allied with the Lib Dems God knows what they are likely to do. If we thought Brown and Balls were tax and waste, we may not have seen anything yet.

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deeply realistic

Feb 18, 2013 at 15:47

David Cameron must be an honourable man to keep to his agreement to have a 5 year parliament when he is in a coalition with idiots like this.

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Mr Grumpy

Feb 18, 2013 at 15:53

What a kerfuffle - and here's me thinking communism was dead.

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Roger Bailey

Feb 18, 2013 at 16:02

according to the gov.uk website there is alreday a 7% stamp duty on property over £2 million!!

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SJB

Feb 18, 2013 at 16:05

Tax on pensioners' income.....even mulling it over will ensure the Lib Dems have lost the pensioner's vote. It seems to be on the same level as Red Ed and his 10p tax.

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Anonymous 1 needed this 'off the record'

Feb 18, 2013 at 16:09

I find it increasingly annoying that the go to place, as always, is the supposed rich of this country when more tax is needed. I'm just into being a higher rate taxpayer, so don't earn a great deal and my opinion doesn't affect me, but taxing those that create jobs, work hard etc so heavilly must do more harm than good.

Where is the incentive to take risks, create jobs, create exports, work hard, and reap the rewards if for every £1 you earn you pay 50p tax (soon to be 45p), NI contributions of a further 2% over a certain amount, the loss of your personal allowance, the loss of your child benefit if you have young children, the further reduction of pension allowances for those that want to legally reduce tax bills and provide for retirement etc etc. And then add into this the mansion tax is totally unacceptable apart from those that are jealous of those that do well for themselves. I see no incentive to earn that money if MORE money goes to tax man, than that you earn for yourself, its theft in my opinion.

It is so easy to bash the rich, but seriously, if I were earning £300k pa, and 50% is disappearing from my paypacket I would do all I could to use one of these loopholes everyone seems to think are immoral. I'm going to whack £8k into my pension just to get below HRT threshold this year and keep child benefit, if I do that, what are the rich going to do? There is a theroy that taxing less, more people will actually be willing to pay and earn, and more tax would be recieved.

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MattM76

Feb 18, 2013 at 16:18

It's so dispiriting. I'm not rich but I work hard and save around a quarter of my income each month and invest it. I hope I'm successful enough to enjoy the fruits of this hard work and saving at some point.

Although by the looks of it, it'll just mean financial punishment when I do retire.

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Bob

Feb 18, 2013 at 16:51

What is really driving the quest for more and more tax is the Stete's voracious appetite for spending everything that we as a country earn. If that could be curbed we might stand a chance of paying our way in the world.

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alan franklin

Feb 18, 2013 at 16:52

If these insane proposals ever got close to becoming law we would most certainly spend it all/give it away before they could get their mitts on it!

The problem is that most Lib Dems, like the rest of the Westminster shower, have never done any serious work. The leaders are all from the wealthy elite, so have no concept of creating wealth from nothing, as my wife and I have done over about 50 years of very hard work.

Yes, we have invested instead of taking holidays, driven old cars and put any spare cash into pension funds and property. We took responsibility for our own old age.

So now we are to be punished? I think I'll join the Romanian layabouts now lounging on street corners everywhere, and start selling Big Issues...Apparently selling one a week lets them be classed as self employed and, hey presto, the benefits bonanza opens up. Of course, as the "rich" pay that's all right then. Goodbye, once Great Britain.

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White Stick follower

Feb 18, 2013 at 17:04

The ever growing demands for more & more tax is a direct result of paying out endless sums to claimants who have contributed nothing to the State.

As for the Lib Dems, apart from questioning their concept of the real world, it seems that they have no morals whatever and will join any 'major' party that will have them. This reminds me of a certain profession- 'I'm yours for whatever amount of time you are prepared to pay me'. The only problem with this lot is once you've got them they won't let go and become intent on promulgating every lunatic thought that comes to mind.

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an elder one

Feb 18, 2013 at 17:27

White Stick follower, I guess you mean prostitution; whereby you may also get more than you bargained for, I'm told.

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Bob

Feb 18, 2013 at 17:48

Although Vince Cable takes the view that some of the proposals put forward on levying a wealth tax on all assets (including jewellery and so on) are impractical because of the difficulty in tracking down assets other than real property, I really don't see the problem. After all, as I am sure the Lib Dem working party grasped, all it would need is for a series of surprise raids to be mounted on the homes and businesses of suspects in order to conduct a thorough search of premises with the aim of ascertaining the extent of their wealth. Clearly, it would also be necessary for the officials conducting the searches to be armed with the power to search the person of any suspect for evidence of concealed wealth. This seems quite straightforward, actually, and I find it difficult to see how anyone could raise objections to such a process - unless, of course, they had something to hide.

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Sam De Zoysa

Feb 18, 2013 at 17:58

@Bob

I see what you did there!

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White Stick follower

Feb 18, 2013 at 18:16

Shades of the pre-dawn knock on the door! Perhaps the practices as reported in some former Soviet States is the way forward in the Lib Dem world? It doesn't seem to quite fit the official Lib Dem ethos. Of course I may have missed a change in approach & policy.

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Sam De Zoysa

Feb 18, 2013 at 18:25

@White Stick follower

Maybe, maybe not, but they are not immune to a less than balanced world view.

http://blogs.telegraph.co.uk/news/tobyyoung/100200145/lid-dem-mp-david-wards-grotesque-caricature-of-israel-and-the-jews-is-all-too-common-on-the-liberal-left/

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Mr Robert

Feb 18, 2013 at 18:37

How unfair is it that there are eight carefully worked out tax bands up to a maximum of £320,000 value house for the little people (Mugs?) who are made to pay tax on their often very ordinary homes. Yet anyone with a home (or mansion) over £320,000 up to millions in value pays no more tax ! Its outrageous surely and the tax banding wants spreading incrementally up through £500,000-£1Million- £2Million on up to £ 50 Million in other words the bigger the house you can afford the more tax you pay. To hell with nailing ordinary people with eight bands up to £320000 and letting the rest off ! what is not is totally unfair about the current system.

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White Stick follower

Feb 18, 2013 at 18:42

I cannot disagree with the perception of the Lib Dems balanced views. What is disturbing is that this minority group seems to hold the balance of power, and in matters of balance the ability to evaluate issues from a neutral perspective is essential.

Do Lib Dems have sufficient contact with the world of reality? I sometimes, if not often, wonder.

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Clive B

Feb 18, 2013 at 18:59

Mr Robert

I assume you're referring to Council Tax. Does somebody with a £1m house (which in the South East or London may be very modest), use any more council resources than somebody with a £300K house ?

If they're going to tax properties, they should do it relative to average house prices in the local area. Otherwise, it's basically a tax on the South East & London, which - according to something I read recently - is the only area in the country that is a net contributor to the nation's coffers.

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Roger Bailey

Feb 18, 2013 at 19:00

@ Mr Robert Council tax is about cost of services individuals receive and should not be based on property values in the first place. When poll tax was suggested, this was considered wrong by the majority of voters.The problem is the majority of voters haven't got a clue what is fair !! Does it cost more to collect a rubbish bin from a property worth £500k than one worth £250k? Possbly yes because there may be more people living in the more expensive property but they pay double for the privilege.

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Mr Robert

Feb 18, 2013 at 19:12

If it is so unfair for houses valued at over £320 000 to pay extra tax. Why is it fair to have eight carefully selected bands for very ordinary people’s houses incremental up to £320000!

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Roger Bailey

Feb 18, 2013 at 19:24

@ Mr Robert. It isn't, a poll tax would be much fairer but most voters rejected this!! Why? Because the poorer would be worse off and unfortunately in this unfair world they are the majority,

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Mr Robert

Feb 18, 2013 at 19:33

Business rates are worked out relative to rentable value .A house rating system based on rentable value would be fairer than this mess where the ordinary man and the multi millionaire in his mansion pay virtually the same

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an elder one

Feb 18, 2013 at 20:04

I never could see any logic in tax bands on homes; the roads and all their encumbrances are there for everyone to use equally and their usage taxed; the police show little regard for anyone in particular; all other services are paid to their suppliers by the home owner based on usage; the house - or mansion - and its land, is paid for and maintained by the owner. The sun provides heat and light - when it feels inclined! - to all, for free and in equal measure.

I can see no real justification, the matter is simple political trickery, intended to exploit however possible, for its own purposes, a pervading sense of injustice - become extreme - in some faction of the electorate.

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Roger Bailey

Feb 18, 2013 at 20:21

@ Robert. Of course business rates are extortionate, , as are commercial rents. The Councils have to get their income from somewhere though !! Why are so many highstreet shops going broke ? The costs are too high !! Council costs must be shared fairly.. Business rates are totally disproprortioniate to the actual cost of their business being in existance. When I returned from,the Middle East some 17 years ago, I considered leasing a shop for £250k per year with business rates of £160K. I decided to retire at age of 50 as the costs and risk were outrageous..

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Jon

Feb 18, 2013 at 20:53

Mr Robert - I guess you would support window tax too - why should people with lots of windows pay no more tax than those with few ? Then again you could tax those with many children more than those with few on the basis that those with a lot MUST be wealthy enough to afford them.

As said before, there is no equitable basis for Council tax - it is just an easy way to raise money. Poll tax should have been pushed through. There was relief for the "poor" in that benefits would have been increased to cover the average cost. But then, once everyone paid Council Tax it might have curbed the extravagant councils so they and all the puiblic employees did not want it !!

Mr Robert - if you ever work hard and long enough to own your house which you bought out of taxed income, and went without to afford it, then how could you justify taxing it again based on its nominal maket value ? And if you are going to start taxing capital then IHT has to go !

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Striker

Feb 18, 2013 at 21:16

My God! Who can I vote for at the next General Election?

When will these IDIOTS learn that taxation is snuffing-out the very recovery that these pretend-politicians are chasing after! Maggie Thatcher was correct about taxes - Cut them and see an ever larger take in taxes as people endeavour to improve their incomes, paying more tax in the process. These Effing left-wing idiots are hell-bent on sending this country back to the 70's, a time when the 3 day week, 80+% direct taxes and strikes just plagued Britain. Its high time the wealth-sucking public sector was taught the lesson that the wealth-creating private sector be largely left to its own devices (within reason) to get on with the job of wealth creation. I fear the pretend-tories and the joke labour & liberal parties will all but destroy the wealth-creating Classes in this country before they are forced to embrace proper Conservative policies once again!

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J Thomas

Feb 18, 2013 at 21:26

The Lib Dems won't stop at £2 Million Mansion Tax.

It would very quickly reduce to a £1 Million asset tax to generate enough revenue.

The breakdown would be something like this:

£500,000 main residence for your modest detached house.

£500,000 other savings and investments including second properties, shares , bonds, gold, cash, etc.

£500,000 pension fund.

Total £1.5 Million, less £1 Million tax free.

£500,000 excess at 5% tax equals £25,000 per annum.

Whats that you say? You dont have the cash to pay the tax?

Simple. The money will simply be taken at source from your pension fund paid direct to The Treasury.

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Mr Robert

Feb 18, 2013 at 21:40

Jon -I take exception at you cheek to insinuate that if I ever work long enough and hard enough bla bla I will think like you .I think not .I am self made through hard work and I own several commercial and domestic properties so I know all about outrageous business rates and domestic rates .

My main point is why do the better off accept eight low bands of house taxation up to £320,000 is OK and feel that is acceptable for the ordinary person to suffer taxation on that banding system but have the arrogance to suggest that the cutoff point of £320000 is fair as a threshold . And that they deem to think it is fair on them not paying incremental buildings value tax on any valuations above that figure.

In America and Australia domestic rates are based on property values .The bigger your property the more you pay. I cannot see it being fair that someone in a ten million pound home pays the same council tax as someone in a £320000 home here in the UK.

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In the Dark

Feb 18, 2013 at 22:06

We need a think tank to do some thinking. I would like to know where they can cut tax and curb their spending.

The task is 3% off national insurance, now which part of the dependency culture can be cut adrift.

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Thoughtfull

Feb 18, 2013 at 22:56

get your lads to stay off the wakky baccy until after they retire; they might then propose some sensible polices before they expire.

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Thoughtfull

Feb 18, 2013 at 22:57

Apologies: the above comment was adressed to Vince's gang of ??

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Jon

Feb 18, 2013 at 23:08

Mr Robert - your difficulty is that you think a tax on property to be fair. From this you then suggest that the tax should be based on property values with higher tax rates on larger properties.

I challenge you to justify this highly selective wealth tax covering the following points :

1. The money raised is for services, which are largely provided to all individuals. In fact some of the lowest contributors may use such services the most.

2. Why is paying for this service based on one form of wealth only? How can it be logical to base it solely on property ownership.

3. Should those with a mortgage pay less - after all they do not own the whole pf their property ?

4. Should we charge those with savings more for bread than those without ? What is the economic difference ? After all, to use your words, someone in a ten million pound home presently pays the same for bread and milk as someone in a £320000 home. This is not fair according to your reasoning..

5, If we charge those with savings more for services then should be abolish income tax and NI ?

6. Why should what they do in other countries be a justification for the unjustifiable? The countries you mention also have some huge tax breaks for the well healed. Should we therefore do the same?

7. I suspect that a large majority of house owners do NOT accept that council tax is OK as a way to raise revenue, so I doubt your logic on that one too.

There are many other aspects. Personally I can never support any extension to a flawed tax. To extend it (as you suggest) is simply extending the flaws. If you want cheek then that is it - using one false premise as proof of justice, and then building further on this under the banner of "equality".Politicians are good at this type of "reasoning".

As has been said elsewhere we need to cut back on central and government expenditure to a level the Country can afford rather than thinking up wheezes which destroy the economy in order to pay for more public employees on ever growing benefit packages. No one likes to cut back, but like any budget holder one has to face reality.

I note that you have not dealt with my analogies of window tax or taxing large families !!!!

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Mr Robert

Feb 19, 2013 at 09:33

Jon in your arrogance to make your points you do not understand the main point and that is the fairness of the matter insofar if it’s good enough to band properties for relatively ordinary people into eight variable bands whereby someone with a house worth £160, 000 should pay more than someone with a house worth £120,000 how can you justify the cut of whereby no extra tax is payable over £320,000?

Surely what is good enough for the goose is good enough for the gander

How can you be so arrogant to suggest that someone in a ten million pound home should not pay more than the man in a £320000 home when careful banding exists bellow that figure?

Are these people above the £320,000 band so elite they are “above” the rest of society and are “above” banding?

Bull they need banding the same as the rest if banding is the chosen method. Why should they be “above it”?

The rest of your justifications are pointless ramblings that do not bear relevance to the main point re banding so I will not even give them credence by attempting to argue with you over them.

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an elder one

Feb 19, 2013 at 10:30

Mr Robert there is no logic in banding at all, it's just political jiggory pokery for political purpose made up as we go along; since the principle is established that people with expensive houses should pay a higher rate of tax, why will they stop there; why not higher rate VAT for the assumed to be rich, higher road tax for BMWs and the like ( perhaps it is; I don't know, mine's a Ford Fiesta) and so on; where there's a tax there's a way.

Regardless of bands, home owners pay their dues, whoever they are, and to make distinctions based on a notion of what constitutes rich is simple exploitation. Still I guess logic was abandoned long ago with income tax, when a rational solution would have been to take a tithe ( or relevant percentage ) off incomes.

What we get with all this jiggory pokery is a complicated mess entailing an excessive expensive bureaucracy, providing numerous avenues for avoidance, all for a questionable return.

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Jon

Feb 19, 2013 at 10:39

Mr Robert - Arrogance is yours as you refuse to justify taxing one class of asset and ignoring the principles. I assume that you are not scientifically trained :-)

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Sam De Zoysa

Feb 19, 2013 at 11:03

@Mr Robert @Jon

Is this what the young people call a flame war?

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talbot

Feb 19, 2013 at 11:15

If I was a rich man I would sell up and become a tax exile and move overseas

Britain is bust after all

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Mr Robert

Feb 19, 2013 at 11:48

I am common sense trained and I am still waiting for you to explain why eight tiers of banding is right for £0 -£320,000 householders yet wrong for houses worth over that. What is special about someone who has a house worth over £320,000 that they should be allowed the cut of point? What deems the eight bands to be justifiable up to £320,000 if not over?

It’s ALL unfair in my view and I am in favor of lesser taxes all round (it will not happen though as governments are going to tax us into oblivion to pay for the mess they have created).Pole tax probably was a fairer system but politically its dynamite so probably will never happen.

But I still do not see why ordinary people with ordinary houses should be banded and anyone with a house over £320,000 gets let off valuation banding .It is unfair .If valuations are good enough for the lower value properties then they are certainly good enough for the higher value properties.

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David West

Feb 19, 2013 at 14:34

Now, now - lets not throw quite so many toys out of our prams.

Basically any government of whatever colour in the UK spends too much. They do a bad job of running the country into the bargain. Today's news is a good example. By 2014/15 we will be facing increased energy bills and depending twice as much on gas as we do now because of not investing in building power stations. This is because successive governments have not planned ahead and made the often difficult decisions when they should have.

The Tories are doing the same now with a decision on whether or not to build another airport. They won't decide until after the next general election. Business can go to hell because it is far too important to their political future not to make a decision now whatever the detrimental consequences to British business.

It is about time that the electorate stands up to government and demonstrates that we are taxed enough and that the money raised would be sufficient if it was used properly. How we go about doing this I haven't a clue. We do not really have a choice at general election time since they are all as bad as each other. I actually despair.

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White Stick follower

Feb 19, 2013 at 15:37

When the Lib Dems, and indeed other politicians talk, about 'rich' people and home owners, they don't really mean rich, they mean middle-class,especially those living and working in London and the South East, in particular the ones who have bothered to work for a living and have put some of their earnings into buying a family home as enjoined to do by successive governments. When we talk about property values we should not overlook earnings and buying power of money. I bought my home for my family in 1975 for £18,450. It current reasonably realistic selling price, i.e. its so-called worth is around £390,000. So yes it has grown in value, but not as much as it appears in purely numeric terms as against the calculated equivalent of £189,000. So I've made a profit, ignoring what I've spent on the place, using my earnings, over the period. But am I rich ? No not really. I'd be looking at millions to call myself rich, and if you've got millions, like many members of Government paying another one or two thousand pounds a year wouldn't be any consequence, but I would notice it. On the other hand I could spend everything I got from working or if not working, given by the State, live in a Council House and not bother about the value of property and being 'rich'. The State will provide for me so why worry. Spend the lot and hold my hand out seems the way forward.

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dd

Feb 19, 2013 at 16:16

... Yes but then you would be doing what the politicians want, White Stick Follower! You would be needing them and their hand outs. You can't do that!

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White Stick follower

Feb 19, 2013 at 18:31

Strange I thought politicians promised at election time to do what the electorate wanted. As for hand outs, all they hand out is other people's money (ours). They don't put their hands in their own pockets- except in the Members bar of course, if they can't get anyone else to pay that is.

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Bob

Feb 19, 2013 at 19:02

Jon (and others). Apropos Mr Robert, I rather think that he has been teasing you. He cannot possibly be as obtuse as he makes himself out to be. He absolutely must be having you on. If not, I proffer my sincere aplogies to him.

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Jon

Feb 19, 2013 at 19:10

Robert - the £320k top band you quote is based on rateable values on 1 April 1991, so at current market rates we are talking about the top band starting at around £1m. So introducing higher bands would not raise much.

Of course those buying expensive houses pay far more stamp duty - at a higher rate on a higher value, so they are stung here compared with those buying cheaper houses. Do you therefore agree that this should be changed, with one rate for all ?

Actually stamp duty is another crazy tax based on the Dark Ages. It hits those who want to relocate and damages the labour market. It also encourages long distance commuting.

But quite simply council rates are a bad tax, and to extend a bad tax makes it worse. Poll tax would be much fairer, but was beaten by an organised anti-Thatcher campaign, even though by far the majority of rate payers supported it. But it would have made Councils more accountable, so they and their employees could not accept that. So we should firstly abolish rateable value bands so every householder pays the same, and better still, switch to poll tax so everyone pays for the services provided from the tax.

Incidentally what is "common sense trained"?.If common refers to the common man then remember that we are 75-85% emotional animals and only 15-25% logical. That is why people such as Creationists cannot be engaged in a logical discussion.

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Mr Robert

Feb 19, 2013 at 20:08

Jon-I take your point about the £320,000 of 1991 being equivalent to maybe nearly a £1m today. But this just serves my point that the current banding system needs expanding dramatically to make things fairer for all as it is too concentrated at the common man end of the pricing spectrum allowing an apparent greater justification of a mansion tax on the very wealthy.

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an elder one

Feb 19, 2013 at 21:02

Commonsense is something imbibed oneself, naturally through the experience of life - the discoveries of what works and what don't work - so gathered in various degree, depending on how open and rational is the mind. To be trained in that regard is something in the nature of brain washing by a third party.

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Roger Bailey

Feb 19, 2013 at 21:17

If Mr Robert has been "common sense trained", then all I can say is he must have had a very poor trainer. I completely agree with your sentiments Jon. Poll tax would be far fairer than Council Tax in the long run. It was blocked by all the lefties. If it had been introduced, the employers would have had to adjust wages accordingly so that the employees at the lower end were able to pay for it. I don't have a mansion, just a G banded property and spend half my State Pension on Council Tax. To live ,I have to spend my hard earned savings because I can no longer get any reasonable income from it. I have no other pension.I have a comfortable house which is actually too large for just my wife and I now ,but want to keep it for as long as we can,afford to,so that we can accommodate our family and visitors when they are able to pay us a visit.Trading down would be a lot of hassle and incur another liability to Stamp Duty.

I agree with your view on Stamp Duty also. My view is that Stamp Duty should be progressive , not cliff edge, particularly on ones principle private residence..i.e you should just pay the percentage difference in the tiers if you decide to upsize. If you just move area and purchase another property for approximatley the same value then you should not have to pay any more Stamp Duty. Then it would be far easier for working people to re-locate to where they could get a decent job.

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dd

Feb 20, 2013 at 10:06

Council tax is also my largest expense, each month. Although this is not new, I think that all council tax payers should know the proportion of their council tax payments which go into the pension contributions for council workers. We keep being told that services will have to be reduced but any small business owner knows that if they want to keep their customers, they continue to provide the quality service or the product and if margins reduce it is their income which shrinks, not the quality of service or product. Then they can't even afford to make pension contributions - but still have to pay for that of others.

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In the Dark

Feb 20, 2013 at 22:15

Let do our own 'Think Tank Stuff' and see how taxes can be cut but first spending has to be cut, so lets begin:

1. Remove all benefits/inducements/tax credits to employed people;

2. Withdraw Free Bus passes;

3. Withdraw Winter Fuel allowance;

4. Remove payments in kind to Councillors;

5. Members of Parliament to have a similar expense regime as the armed forces or even the civil service;

6. Welfare benefit in total to be capped at 30% of the average wage;

7. Remove the requirement for postal voting;

8. NHS to ensure that customers are entitled to the service; and

9. Cut the number of MP to 600, (What! fall on our own sword, do be serious)

This website is about wealth creation. To create wealth requires people to be entrepreneurial and most important Government to be responsible with other peoples money. Reducing Government spending must be a priority along with reducing the tax take on the taxpayer.

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dd

Feb 21, 2013 at 09:17

How can any government cut the structural deficit by 100% (not by 25%) without breaking the promises for the future (increased total liability re unfunded pensions, for example) made by Labour? Until that is done, the debt will continue to rise and spending will increase.

Growth in the economy is no longer desirable but is absolutely essential in order to stand still. Regulations from Europe cripple small businesses and prevent that growth in the area which is most likely to provide it.

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Brian Stafford Garthwaite

Feb 24, 2013 at 10:50

The problem with the old poll tax was that everyone paid the same amount,regardless of income. This was a heavier burden on the low incomes than thse with higher incomes. i think it was this that caused the anti poll tax rebellion.

Taxing higher value properties could still cause "unfairness" it would mean those living in the "Better areas" would pay more tax for the sames services. I think there should be a modest property tax and a local income tax.I understand that it has been found raising tax RATES does not necessarily mean the Govt receives more tax REVENUE.

The fact is the Govt spends too much and sooner or later there will have to be some drastic cuts in Govt expenditure. I understand that 60% of the total income tax revevue recived by Govt is paid by the top 14% of higher income tax payers.

Not much "fairness in that"

I am retired, certainly not wealthy,I could not move south as my East Midlands semi detached house is worth considerably less than the average property in the South East. t Council tax takes 10% of myu very modest pension income. .

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Roger Bailey

Feb 24, 2013 at 12:16

At the time, I could not understand why there was an objection to Poll Tax. For the average household with 2 kids they might pay two poll taxes at £600 p.a. rather than one lot of Council Tax at £1200. My Council Tax is almost 50% of my Basic State Pension!! Bearing in mind that people with higher incomes pay higher rate taxes, is it right that if a poorer persons pays £1 for a packet of crisps a wealthier person should pay £2 ?

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Anonymous 2 needed this 'off the record'

Feb 24, 2013 at 12:18

That is an interesting calculation in your last paragraph, Brian. Here is a different perspective (for provoking thought, not to criticise):

I live in the South East, where I grew up and have family etc. Simply due to higher "worth" of probably the same kind of house, I may be considered to have some wealth. However, my current income is so low that Council Tax takes about 30% of it. If I were to move house away from South East, I would lose my low paid job and I don't want to do that because any income is useful right now and at my age it will be difficult to find new employment. A single holiday is unthinkable and yet it is proposed that wealth such as mine needs to be taxed further in preference to taxing the income of those who can afford a holiday.

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Andy Mann

Feb 24, 2013 at 13:50

Wealth Tax ? The cost of the treasury bail 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. Corporate losses have been transformed into sovereign debt. The treasury's got to get the money from somewhere and a wealth / mansion tax is what the LibDems propose - a police state masquerading as philanthropism.

If I wanted something like this I'd move to Russia circa 1917 when the Cheka was created.

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Brian Stafford Garthwaite

Feb 24, 2013 at 17:06

Anon - your position is far worse than my own - Council tax in relation to your income - I think the only solution is a modest property tax AND a local income tax. The problem with this would be the cost of administering such scheme.

HMRC can hardly cope as ihings are without loading them with more work.

Though with a good computer system it surely could be done.

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David West

Feb 24, 2013 at 17:53

I am not sure how it is administered but New York has a local tax, as I believe a lot of other places do. However not in the UK.

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David West

Feb 24, 2013 at 17:56

I should have said a local purchase tax. Although not a direct tax on income a local purchase tax might be a good alternative to replacing or substantially reducing the council tax burden.

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White Stick follower

Feb 24, 2013 at 18:12

Generally US States levy a State Tax & a Federal Tax on sales. Bizarrely in some respects Florida has, in addition, a Room Tax on Hotel Rooms, payable by the guest. One wonders why anyone would wish to stay in an Hotel other than by way of the rent of a room. Hence being taxed for making use of the facility that an hotel provides seems odd, given that without guest the hotel would have little business.

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Graham Smith

Feb 24, 2013 at 18:51

Over a number of decades and no matter what party is in power the gap between the rich and the rest has just got continually wider. When that happens it breeds a deep resentment and those worst effected seek to redress the balance. Whether this would lead to a more contented society isn't clear, but in anycase would probably be self defeating as the rich nearly always find ways to alleviate any onerous measures levied on them by government.

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Anonymous 2 needed this 'off the record'

Feb 24, 2013 at 22:23

What I can't understand is why those who can afford nice holidays out of income consider themselves to be hard done by, so hard done by that they feel the need to strike.

As for a solution, I don't disagree with local income tax, though from the administrative point of view additional bands of council tax at the top end should not be so costly to implement.

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A C Wiltshire

Feb 25, 2013 at 02:22

Tax, tax and tax again. That's all these useless politicians can think of. Instead they should be working at reducing the size and therefore the cost of government.

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Rightcharlie1

Feb 25, 2013 at 05:27

Well unfortunately, all polititians and most civil servants do not understand the real world, one in which you work for a comapany and that company has to make a profit or you don't get paid. They just look at tne money tap in ths sky and turn it on a bit further, wonder why the reservoir empties and try to fix it by making more clouds! They assume these clouds will deposit their rain drops in their reservoir because it is their duty. They cannot understand that as the tax wind changes these clouds can drift and deposit less of their rain drops in more favourable places!!!! Look at the French, their civil servants are discusted that people would leave the country to avoid giving 75% of their income to cretins!! I rest my case!

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Brian Stafford Garthwaite

Feb 25, 2013 at 10:26

Charlie - you are so right -I think the problem is due to so few of our politicians have experienced the real world, working for a private company where the bottom line counts! Govt takes too much out of the economy and then spends it badly!

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talbot

Feb 25, 2013 at 11:10

The above comments are both correct

Unfortunatly the politicans have clients just like accountants and they naturally want to get re elected so they have built up a client state weather they be government employees retired state or local government hospital employees or just old age pensions so the only way they can pay the bills is to print money or rob the rich

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dd

Feb 25, 2013 at 13:51

If you are self-employed and times become hard:

- the first thing that goes is any contribution towards a pension however stupid that may sound, because you need to eat today.

- You continue to work as long as you are physically able.

- You don't consider a comfortable 30-year retirement to be an entitlement.

I don't wish this upon anyone but I would like the decision makers to learn the associated lessons. Some of them need to study basic sums before making idealogical promises the country cannot afford to keep. A reality check would not go amiss.

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rik

Feb 27, 2013 at 22:16

Some observations having read this thread.

1) Government must collect taxes

2) Taxes are seen to be'fair' if someone else has to pay

3) Taxes are seen as unfair if 'I' have to pay

4) If you are serious about not paying tax earn little, spend less and give the difference away

Alternatively celebrate the fortunate situation you are in, helping the country pay its way through your tax contributions. After all, they will have it one way or another regardless of our view.

Rik

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