Allegra Stratton at the Guardian set the ball rolling yesterday on whether the Lib Dems are planning a new type of mansion tax – albeit under a different name.
The proposal is being kicked around by senior Lib Dem figures (such as Richard Reeves, policy wonk to Nick Clegg) but is meeting resistance from Tories. It is also unpopular with other Lib Dems such as David Laws (who is playing a key role in co-writing their “Tax 2020″ document). That’s right: Laws does not want it.
Wealthy FT readers in big houses may rest easy for a while longer.
Here’s our news take on it:
Owners of £1m-plus homes would have to pay capital gains tax when they sell up under attempts by senior Liberal Democrats to revive their “mansion tax” proposals.At present CGT is paid at 28 per cent when a second home is sold but main residences are exempt from the levy.But Lib Dems are considering whether sellers could be forced to pay the duty on any profits beyond a £1m tax-free threshold – a policy which could bring in billions for the exchequer.Treasury officials have had discussions with experts in the property industry to find out how many people live in multi-million pound homes and where they are located.However, the proposals are likely to meet fierce resistance from Tory ministers given that many Conservative voters live in homes worth more than £1m.Vince Cable, as opposition Treasury spokesman, was forced to revise his original “mansion tax” proposal – an annual levy on big homes – after the Lib Dems realised that it would harm many of their suburban voters in south-west London.The business secretary’s attempts to revive the mansion tax as a device to phase out the 50p income tax band have not attracted the wholehearted support of his colleagues.But Mr Cable is still keen to address the issue, telling the Social Liberal Forum, an internal party pressure group, at the weekend: “We are going to have to address the issue of wealth, property, land as part of a fundamental progressive reform of the tax system.”He told the gathering: “There was a wonderful piece in the property section of one of the [newspapers] yesterday, which said ‘Oligarchs are being priced out of central London’. That said it all.”George Osborne, chancellor, said in the Budget that he would seek to address tax duty avoidance on the sale of large houses.Lib Dems want him to go further and find a way to shift the tax burden away from income and on to assets. “Property and pensions make up 80 per cent of individual wealth,” said one aide. “It makes sense to look at the wider issue, and we have asked the Treasury to look at this and they are tossing around a lot of ideas.”The idea of hitting owners of £1m-plus houses is just one of many being considered – and is not official policy – according to a Lib Dem spokesman.“We have said previously we’re not working on a mansion tax policy, nothing has changed,” said a Treasury aide.David Laws, former chief secretary to the Treasury, is involved in writing a document called Tax 2020 setting out the Lib Dems’ medium-term fiscal strategy.But Mr Laws’s focus is on cutting taxes and he opposes new levies on property: “David Laws does not believe in any form of mansion tax, son of mansion tax or increase in CGT,” a friend said.
(Additional reporting Kiran Stacey and Dan Thomas)