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LibDem 'mansion tax' is crumbling

publication date: Dec 11, 2009
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The LibDems have thrown themselves open to much amusement across the media with their squabble over proposals for a Mansion Tax.

Vince Cable (who doesn’t live in a mansion but does live in one of the most pleasant areas of southwest London) announced a LibDem plan for a tax on people who own homes worth more than £1million.

The idea was that this new tax would be charged at a rate of 0.5 per cent of the home’s value, per year, so on a house worth £1million, the tax would be £5,000. On a home in Prime Central London, worth say, £25 million (not uncommon) the Lib Dem tax would be £125,000. The tax would have affected an estimated 250,000 homes.

However, the plan provoked outrage among members of his own party, who either live in such homes or represent people who do. Those fighting for seats in the election in high value areas feared that they would not stand a chance of success. Vince does, of course, represent Twickenham – and he lives there.
In a masterstroke, LibDem leader Nick Clegg, announced today that the tax would be adjusted to be due on homes worth £2million or more, reducing the range of affected homes to just 70,000. So, a £2million homeowner would have to cough up £20,000 per year, while the oligarch with the £25 million home would be £250,000 a year worse off.

On BBC Radio 2’s lunchtime show today (Tuesday) Jeremy Vine spoke to a variety of Liberal people who argued themselves away from supporting their own party policy, saying that it was unfair on old people who had a big house but no cash – Vince Cable had previously said that where this was the case, the old person should sell their home, then they would a) have more cash and b) not come into the bracket anyway. Asked if it was unfair on people who already paid Income Tax at 40 per cent to then have to pay a further £20,000 out of taxed income they agreed it probably wasn’t.

In the Propertydrum office we just wonder if its all slightly academic, but a good rumpus all the same!