A way of evening the odds, or counterproductive and wasteful? Our panellists battle it outby Mark Ferguson, Nick Carn / October 16, 2014 / Leave a comment
Should we introduce a mansion tax?
Labour’s “mansion tax”—an annual tax that could be levied on properties worth more than £2m—has, I believe, a small part to play in tackling the structural inequalities of British society. We live in a country where wealth inequality is increasingly Dickensian in nature, and the expansion of unearned wealth (of which house prices are a major part) has a deeply pernicious impact. This is exacerbated by a warped housing market where foreign oligarchs buy homes at stratospheric prices in central London, forcing up house prices across the country in general, and in the capital in particular. A mansion tax could have a small impact in limiting the deeply destructive house price boom—although a sustained house-building programme would be far more effective.
Yet a better case for the mansion tax is one of reciprocity and solidarity at a time of scarcity. Even the most modest home is now worth far more than it was a matter of years ago. It is only right at a time of extreme public spending restraint that those who benefitted most from the housing boom should contribute more to the public purse. And while those who are asset rich but cash poor must be protected from a tax they cannot pay (Ed Balls, the Shadow Chancellor, has indicated Labour would do this) the vast majority of those living in multi-million pound properties can and should be contributing more—not just from their income, but also from their assets which have ballooned in value. If a property has increased in value by 10 per cent in a single year, that’s not due to any skill or judgement on the part of the homeowner. Instead, it’s luck and a broken housing market that have caused such a dividend for the lucky few.
A mansion tax alone is not the answer to these problems—but it is surely a part of it.
Your case for a mansion tax is that it would address inequalities of wealth and cool the housing boom, but how effective would it be in achieving those aims? Would taxing expensive houses help to ease…