Date published: 2007/03/03
The BBC says:
People owning homes worth £1m or more would face a new "wealth tax" under plans being considered by the Lib Dems.
Treasury spokesman Vince Cable wants to hit "obscenely large" property investments and believes an annual 1% levy could be the solution.
The estimated £1bn return would be used to cut inheritance tax and stamp duty bills for the less well off.
More stupidity from the Lib Dems. First of all, why £1m and not some other arbitrary figure? These households already pay council tax, which would be of order £2k or £3k depending on where the house is located. So the Lib Dems are saying that if your house is worth £999999 then you should pay around £2k to £3k in property tax per year. But if your house is worth one pound more, then your tax bill should suddenly multiply by anywhere from four to six, to the range of £12k to £13k. What sense does that make? (About as much sense as their similarly idiotic proposal on car tax, which has a similarly nasty multiplier at various band boundaries for similarly vindictive reasons.)
Secondly, is it deemed ok for one person to live in a house worth £900k but obscene (i.e. worthy of a special punitive tax) for two adults and three children to live in a house worth £1m? If a pensioner lives in a house worth £1m, are the Lib Dems still going to charge this extra tax? The Lib Dems constantly harp on about how unfair the council tax is to pensioners and how the council tax should be replaced with a local income tax, to better reflect ability to pay. Well this tax proposal makes a complete nonsense of that bleeding heart rhetoric. Or are the Lib Dems going to introduce another arbitrary boundary and say that it is obscene for a 64-year old to live in a million pound house but ok for a 65-year old to do so.
Thirdly, who is going to value the property? And what indexation will there be? Needless to say, many, even fairly ordinary, houses in or near London are already worth over £1m, while equivalent houses elsewhere in the country are worth less. So the Lib Dems are just trying to introduce yet another tax which will see the south of the country handing over money to the north. Any house valued at just over £1m will no doubt be subject to a challenge, and if unsuccessful perhaps the owner will just tear up the front garden (or whatever) to make the house worth less.
Finally, there are various mitigation strategies that people will take to get around this tax. You can split your property into multiple households, reducing the value of each one. A husband and wife living in a £1.5m property can end up each living in a property worth £750k. They would (presumably) have to pay 4% stamp duty on the transaction, which means it would take several years to break even on the transaction (more than four years because they would be liable for two council tax bills, although each would get a 25% discount). And no doubt even more imaginative tax dodges will be dreamt up, given this new tax.
The Lib Dems are unfit for office. Vince Cable in particular is a liability. If politicians spent as much time trying to make the country work properly as they spent trying to screw some constituency or other (rich people, unmarried people, smokers, drivers, take your pick) then the UK would be much better off.
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