Originally published @ 11:35 pm, Tue 1st Dec 2009
Arriving at Westminster I picked up a copy of the Evening Standard which featured a Lib Dem change to their mansion tax plan.
Now I've never really understood why the Lib Dems got into this, cos they hate the existing property tax - the Council tax and keep saying income taxes are fairer (but a local income tax would hit young workers and families hard).
So how did they end up with a new type of property tax as a flagship policy?
And then it turned out that the threshold they'd set of taxing properties worth over one million pounds would fall disproportionately in the constituencies they're seeking to hold.
Hence the change to a threshold of £2 million.
This still wouldn't tackle how they'd determine which houses / mansions are worth more than £2,000,000. House prices do vary so and have gone down as well as up. Would-be payers would have every incentive to appeal since the tax is not a generalised band tariff, but to be 1% of the estimated value per year. Households very close to the threshold would be very determined to appeal, so all-in-all, this seems like a tricky tax to implement. (OK - for houses recently sold, their value is much clearer - but there were just 86 properties in the whole of England and Wales that were bought for £2m or more (July 2009) according to the Land Registry.)
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A number of Lib Dems tax proposals show the same kind of muddle. ---->
ïÄÄÄÄÄÄ Raising Personal Allowances to £10k: The Lib Dems have underestimated the cost of their headline tax policy by over £5bn. They have claimed this costs only £16.5 billion. But figures already available on the Treasury website show that increasing the personal allowance from around £6500 to £10,000 next year would cost over £22bn (i.e. each £100 rise costs £650m for tax year 2010/11)
ïÄÄÄÄÄÄ The Lib Dems claim they could save £5bn from closing loopholes, but these figures are just plucked from the air. Even Vince Cable admitted at the press conference today, they were just hunches.
ïÄÄÄÄÄÄ The Lib Dems say they would raise £2.2bn from replacing Air Passenger Duty with a per plane tax. But Budget 2009 (p154) shows that switching back to this proposal would raise only another £190m next year. The Government announced it would switch from the ‘Aviation Duty' single plane tax that it consulted on to the Four-Band Air Passenger Duty that came into effect on 1 November 2009. The Lib Dems seem to have missed this.
TO BE UPDATED
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