Forum Topic

Brentford & Isleworth a marginal seat

Oh what a delight, officially a marginal seat and according to various newspapers a seat in which the topic of mansion tax may decide the vote.So, in order to influence the vote, here are the mathematics of mansion tax (ie the stuff Ed Miliband doesn't mention and Ed Balls can't work out)£1.2bn revenue but £2.0bn loss of other revenue equals not a penny raised.Mansion tax in its proposed form won't make a penny for the NHS and is the thin end of the wedge known as 'home ownership tax' that will have us all paying 1% of the value of our homes each year as additional tax.Various non-party independent reports say the tax has to average £12,000 per home to raise £1.2bn a year. They say this level of tax burden not surprisingly devalues 'mansions', with the result that stamp duty revenue falls. They even put a figure on it, 20% fall in value and £2.0bn per year less revenue than at the moment.1.6% of homes pay the majority of stamp duty revenue and stamp duty revenue is currently over £13bn a year, so the reports make perfect sense. So what is £1.2bn a year take away £2.0bn and how many nurses does that buy?Mansion tax only works when extended to the general housing population just like has been done in Greece.  Mansion tax introduced in 2008 and by 2013 anything worth more than £250k was an official mansion.  Tax rate is 1% of value per year.The tax everyone thinks is great because it's tax 'someone else will pay' is in reality a whole new area of taxation that we will all pay.  Taxing the prudent, once again, taking those that decided to buy a home instead of a new car or a fancy holiday.

Lorne Gifford ● 3938d13 Comments

This is the classic argument that is reeled out to favour asset tax over income tax.  If you tax an asset then your taxing someones wealth, whereas if you tax income your not.  However, the classic counter argument is that the owner has already paid for the benefit of the things you mention because the owner paid a much higher price to buy his home than he would have for a similar house somewhere else.  The owner also paid 12% stamp duty, which is a direct payment of 'purchase tax' to the government. Since the average home is bought and sold every 10 years, this purchase tax gets paid again and again to the government. Indeed the only people that you could say benefit from the improvement of their surroundings increasing the value of their house substantially are the little old ladies that bought a house in 1960 and haven't moved since.  And I'm sure we would all agree we don't want to force them out of their homes as doing so would make this society a bit like North Korea.The other counter argument is that since we tax income and not assets it's all very good and well talking about the benefits of one or the other, trouble is that Labour want to do both.  They want to tax your assets after having taxed the income you earned to buy them.  They also tax you on them when you die, but that's another discussion altogether

Lorne Gifford ● 3929d

The unfairness of the 'mansion tax' lies in its taxing just one class of asset and only individual houses, at that. Someone who owns two or more properties each worth 1.9m won't pay a penny, while someone whose family home is worth 2.1m will. How can that be justified?

Susan Kelly ● 3929d

OK, here's an attempt to defend the mansion tax ...Why is a small house here worth more as much as mansion somewhere in the middle of the countryside?A small house here as much because of all the things around us:- museums, theatres- big employers- interesting shops and restaurants- international airport- parks- hospitals, fire and police stationsThese things didn't appear here by magic, nor did the owner of the land pay for them - but the owner benefits by their presence.Does it seem that unreasonable to ask that the owner of the land put a little back into the community in return? It could be argued to be a fairer tax than income tax - it's a payment to those around you which is reciprocated by them a) respecting your property rights and b) making the area around your property better. It's also harder to evade (it's hard to hide a mansion or move it off-shore!).I agree that it does somehow feel unfair that the tax can go up year on year based on the over-hyping of property prices. Perhaps as you say it could be based on historic figures.

Kyle Edwards ● 3929d

Not to worry, Guy on the 'are Labour too scared to knock at my door' thread is going to ask Ruth to explain the mathematics of mansion tax to us.If, as I suspect, it will quickly change to be a tax on any home deemed better than average then I'm sure she'll spill the beans and let us know.

Lorne Gifford ● 3934d

" but the notion that Ruth Cadbury is not familiar with Labour policies rather stretches the imagination for me.  Indeed I would imagine she probably chants them in her sleep."Shame then that she could not remember a single part of her mantra when she was asked. Perhaps they should have asked her to talk in her sleep!

Nigel Brooks ● 3934d

As somebody who couldn't be persuaded to vote either Tory or Labour no matter how many virgins they offer me in the afterlife I certainly couldn't be accused of bias, but the notion that Ruth Cadbury is not familiar with Labour policies rather stretches the imagination for me.  Indeed I would imagine she probably chants them in her sleep.  That said though they change so frequently during the course of a campaign - particularly when it eventually dawns on them that they can no longer take their traditional voters for granted - that any party drone, no matter how faithful and obsequious, could be forgiven for losing track.

Phil Andrews ● 3934d

Hello Thomas, yes definitely biased.  I hate any party that tries to buy votes with a tax 'someone else will pay'.  I particularly dislike the way Labour are buying votes by proposing a envy inducing tax that won't actually raise a penny in revenue.  Since it will loose future government revenue you could quite legitimately call it 'buying votes with government funds'. heck of a scam!You asked for references so please Google 'mansion tax marginal seats' for various quite reputable newspaper articles.Since B&I is no longer a marginal seat, perhaps you could enlighten us as to who will win it?  Not Labour I hope as apparently Ruth Cadbury can't even remember what Labours policies are.  You'll ask for a refence so here it is; http://www.independent.co.uk/news/uk/politics/generalelection/watch-the-horribly-awkward-moment-this-labour-candidate-forgets-her-partys-policies-10177591.html

Lorne Gifford ● 3935d

"according to various newspapers a seat in which the topic of mansion tax may decide the vote."Very stupid newspapers who can't count, I suspect.  Care to name them?[even in west London properties expensive enough to be subjected to the proposed tax are a minority, are quite large and have a much lower density of voters than, say, a block of buy to let flats and even here in Chiswick Labour placards outnumber Tory ones about 8 to 1]If anything as the campaign's progressed B&I has dropped out of most people's idea of what a marginal is in favour of places like Ealing Central and Acton or Harrow, which are genuinely knife-edge."will have us all paying 1% of the value of our homes each year as additional tax":Except the millions people who rent (and vote). Your bias is showing, I fear - home ownership rates have fallen* as the housing bubble has been deliberately fuelled by government policy and any recognition that this is unsustainable and damaging to the public interest, however slight, is to be welcomed.* 70% to 65% in the last 12 years, having climbed consistently before that.  Now back to 1987 levels.

Thomas Barry ● 3935d

"The idea is as usual bird brained."Is that because Ed Balls is bird brained?If he really wants to have a 'mansion tax' why not simply declare every house of more than three bedrooms a mansion?

Steve Taylor ● 3936d

When you have former council houses and modest small homes in London and the South east already hitting £1m and many more likely in the next 5 years, it is difficult to see how this is popular and fair.£650,000 buys a real mansion with acres of ground in Somerset and it is highly unlikely to hit the threshold in the next 10 years. The same buys a 2 bed terrace with not even a space to keep a push bike. Yet may be in the mansion tax category by 2018?Is that a fair tax?  Popular with who? What would be fair is to base the mansion tax on what you paid for the property when you purchased it..That may a, Stop the overhyping of property prices and b. tax only those who can afford £1 or £2million  homes.The idea is as usual bird brained.

Raymond Havelock ● 3937d

Here's just the maths that conclusively show 'mansion' tax is a scam:Take a £3.5m 'mansion', this being the average mansion value today (ie the average of all property valued at more than £2m).  According to the Times and various other papers the mansion tax on this house will need to be £25k a year for Ed Balls to get his £1.2bn a year overall revenue.Stamp duty revenue on purchase of £3.5m = £335,000Present cost of a £25k into perpetuity annual tax at the current bank interest rate of 2.5% = £1mValue of house after introduction of tax = £2.5mStamp duty paid when next sold = £214,000Loss of stamp duty revenue = £121,000100,000 'mansions' in this country and average ownership time is 10 years between selling so overall stamp duty loss of revenue each year is 100,000 x 1/10 x 121,000 = £1.2bnInheritance tax on current £3.5m value = £1.3mInheritance tax on revised value = £870kLoss of revenue = £430k100,000 'mansions' and their owners die on average once every 40 years (you only own a mansion for around half your life) so inheritance tax loss of revenue each year is 100,000 x 1/40 x 430,000 = £1.1bnOverall loss of revenue from introducing mansion tax is therefore £1.2bn + £1.1bn = £2.3bnI know it counts as impossibly difficult maths for Ed Balls, but it's simple enough for the rest of us.

Lorne Gifford ● 3937d

How about the one from the Centre for Economics and Business Research. Completely independent unlike the 'left wing rag' you quote.http://www.fairhometax.uk/CEBR_MANSIONTAX/assets/common/downloads/publication.pdf£1.2bn minus £2.0bn = no help at all for the NHSAnd for your last point, then since stamp duty is on a sliding scale in which 'mansions' pay 12% and since the average time between buying and selling any home is 10 years, your average mansion pays 1.2% of value per year for this tax already, all collected up front of course.  That is considerably more than the change from rates to council tax.

Lorne Gifford ● 3938d

According to that left wing rag Citywire:"Although properties worth between £2 million and £3 million are expected to pay no more than £3,000 a year, experts have claimed that those with homes worth £3 million or more would have to pay tax ‘on a different order of scale’ so Labour could meet the £1.2 billion total levy it pledged to raise, according to the Times."I find that a bit more convincing than the hooey from unspecified 'various' sources that you quote.The mansion tax will raise a great deal of money, directed towards the NHSThe mansion tax is very popular  with the public in generalWhen the council tax was introduced to end the poll tax fiasco, the amount raised was about 40% less than it had been under the rates, with most of the reduction coming from more expensive properties, so a mansion tax is reversing (belatedly) a huge tax cut to the very wealthy which was introduced by M Thatcher back in about 1990

Guy Lambert ● 3938d