Proposed Property Tax on £1m+ homes is not clever! |
 |
22nd September 2009
Liberal Democrat Treasury spokesman Vince Cable has announced plans to tax owners of homes with a value in excess of £1m, though wouldn't confirm whether this would be permanent or not.
Mr Cable wants a 0.5% annual levy on the most expensive homes to raise £1bn to help low-paid workers.
The the property tax would be collected by the Local Authority which would affect an estimated 250,000 people with an average bill of £4,000 a year. Mr Cable advised that it may be dropped the party succeeded in swapping council tax for a local income tax.
The new charge of 0.5% would apply to the value of a property above £1m. So if a home was worth £1.5m the 0.5% tax would apply to £500,000 of it, meaning the owner will have to pay £2,500 a year. The extra tax on a £4m property would be £15,000 a year.
Whilst it is not our policy to become embroiled in politics, this is an issue which can only be seen as another tax on London. People with £1m homes may have equity, but they aren't always cash rich. Many have lost their city jobs or have had bonuses slashed. High earners already pay 40% income tax. Many owners of expensive homes are often retired people who wont sell their family homes as they consider them an inheritance for their families, especially as prices have fallen so much. Often their incomes have been affected as well as a result of low interest rates. Further, the so called 'Mansion Tax' will apply not just apply to mansions, but flats in central London.
Its seems that this policy is one to appeal to the masses rather than be based on sound economic fairness. Often, large family properties have one breadwinner. A married man earning £100k will have deductions of £34,688. A professional couple each earning £50k each will pay a total of £28,400. The high earners are already taxed more heavily and often have dependents. This new proposal will alienate the Lib Dems with some key voters and is a flawed policy designed to get votes. The last thing the property market needs is another tax.
On the plus side, I wonder how many predict that the Lib Dems will mount a serious challenge for Government when, according to a Newsnight Poll, 36% of people hadn't heard of Nick Clegg.
