Ed Miliband’s announcement that Labour backs a mansion tax on properties over £2m, with the money used to fund a new 10p rate of income tax, has left the two coalition parties scrambling to trump the opposition with their own progressive tax plans.
For the Lib Dems, this meant leaking a tax document* being prepared in advance of the party’s spring conference. The paper proposed extending the mansion tax from people’s first properties to apply also to additional properties and any other land they may own. It also suggested the more radical idea of taxing assets such as paintings, jewellery and even record and book collections – although this was quickly dismissed by Vince Cable.
The Tories offered their own response on Sunday evening, when Tory chairman Grant Shapps appeared on BBC 5 Live’s Pienaar’s Politics. Shapps told the programme the Tories were considering pushing the income tax allowance beyond the £10,000 level currently planned – something that could go into the party’s 2015 manifesto.
We’ve already said that we want to get it up to £10,000 and I don’t think I’d be revealing too much to say that our ambition might be to get it higher. I certainly think taking people out of tax entirely is the most efficient best way to do this.
I mean after all, having tax inspectors running around trying to charge people even if it’s only 10p in the pound and work out their tax situation on for the hardest pressed people on the lowest pay in this country is not good use of taxpayers’ time and people should be able to earn that money without having to worry about paying that tax…
I think if you take people out of tax then you don’t have to spend time, money and energy and costs in chasing people for relatively small amounts of money and guess what you get more people into work because it actually pays to work.
What would this mean for the Lib Dems, whose policy is to take the £10,000 limit up to £12,500, the annual salary of a full-time worker on the minimum wage? Either this could be read as an aggressive move by the Tories – trying to steal their coalition partners’ tax plans – or as a way to encourage the smaller party into a coalition come 2015.
Either way, Miliband’s announcement has done as much to change relations within the coalition as it has to change views on their own tax policy.
*This paper has actually been published on the party website, rather than leaked. Thanks to @nickthornsby for flagging up my mistake.