"Why has Labour given up on the mansion tax?" asks Donald Macintye in today's Independent (and in the i, p.13).
Because it was the wrong policy, at the wrong time - that's why!
Never mind that the Labour leadership front-runners are rushing to out-do each other in distancing themselves from any of Millibubble's so-called 'left-wing' policies - and that house-sales worth £2 million and more have doubled since the election two weeks ago. The fact is that a far better policy is to re-calibrate Council Tax, so that richer people pay more. This has virtually identical effects to the Mansion Tax, but is much easier to introduce (because the basic mechanism is already in place), and can be fine-tuned as prices change in the future.
At present Council Tax is monstrously regressive - the rich pay less. A £160,000 semi in Nottinghamshire leads to twice as much Council Tax as a £2m house in Putney, says Macintyre - where's the justice in that? Far better than hte Mansion Tax to revise Council Tax-bands so they are progressive rather than regressive. A good rule-of-thumb would be to have a nominal tax for all houses under £200,000 say, and then charge 1% up to a million, and 2% beyond that.
Macintyre says that the much-needed revaluation will never happen "because of the all-too-vociferous losers it will throw up". True - losers always make more noise than gainers. For that reason, this policy like many others would best be brought in in two stages. In Stage 1, the general structure would be changed so that it becomes fiscally progressive, so the rich pay more. In this stage, the change would be TAX-NEUTRAL i.e. it would not raise any more tax. It would just get the principal across. Because it is tax-neutral, there would be more gainers than losers, aprt from great gains in administrative costs, savings in exemptions etc. A later second stage can then introduce tax increases when desired. By that stage, the political principal will have been introduced, and everyone will pay up quietly! (This method of proceeding is worth considering in many situations where a change in policy is to be combined with a gain in tax-revenue - the two parts are best separated out, and kept clearly apart. Things get confused if the policy of recalibrating tax bands is merged with the desire to collect more funds.)
(Macintyre says that one reason why the Mansion Tax policy is better than the above, is that is is easier to hypothecate the revenue resulting from it, and pass it straight to the NHS, which was what Millibubble wanted. This is another case of confusing things by putting two policies together that are better kept separate.)
Because it was the wrong policy, at the wrong time - that's why!
Never mind that the Labour leadership front-runners are rushing to out-do each other in distancing themselves from any of Millibubble's so-called 'left-wing' policies - and that house-sales worth £2 million and more have doubled since the election two weeks ago. The fact is that a far better policy is to re-calibrate Council Tax, so that richer people pay more. This has virtually identical effects to the Mansion Tax, but is much easier to introduce (because the basic mechanism is already in place), and can be fine-tuned as prices change in the future.
At present Council Tax is monstrously regressive - the rich pay less. A £160,000 semi in Nottinghamshire leads to twice as much Council Tax as a £2m house in Putney, says Macintyre - where's the justice in that? Far better than hte Mansion Tax to revise Council Tax-bands so they are progressive rather than regressive. A good rule-of-thumb would be to have a nominal tax for all houses under £200,000 say, and then charge 1% up to a million, and 2% beyond that.
Macintyre says that the much-needed revaluation will never happen "because of the all-too-vociferous losers it will throw up". True - losers always make more noise than gainers. For that reason, this policy like many others would best be brought in in two stages. In Stage 1, the general structure would be changed so that it becomes fiscally progressive, so the rich pay more. In this stage, the change would be TAX-NEUTRAL i.e. it would not raise any more tax. It would just get the principal across. Because it is tax-neutral, there would be more gainers than losers, aprt from great gains in administrative costs, savings in exemptions etc. A later second stage can then introduce tax increases when desired. By that stage, the political principal will have been introduced, and everyone will pay up quietly! (This method of proceeding is worth considering in many situations where a change in policy is to be combined with a gain in tax-revenue - the two parts are best separated out, and kept clearly apart. Things get confused if the policy of recalibrating tax bands is merged with the desire to collect more funds.)
(Macintyre says that one reason why the Mansion Tax policy is better than the above, is that is is easier to hypothecate the revenue resulting from it, and pass it straight to the NHS, which was what Millibubble wanted. This is another case of confusing things by putting two policies together that are better kept separate.)
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