U.K. Deputy Prime Minister Nick Clegg said the government could determine without difficulty which homes would be subject to a “mansion tax,” brushing aside arguments that it would be tough to apply.
Clegg’s Liberal Democrats propose levying an annual 1 percent charge on houses and apartments valued at 2 million pounds ($3.25 million) or more. Clegg has been pressing at the party conference this week for increased tax revenue from the top 10 percent of earners as he seeks to differentiate the Liberal Democrats from their coalition partners, Prime Minister David Cameron’s Conservatives, who oppose a mansion tax.
“The Office of Valuation can identify in five seconds flat the properties which are worth 2 million or more in this country,” Clegg said in a Bloomberg Television interview at the conference in Brighton, southern England, last night. “We’ve sweated this policy so hard over so many years I think we’ve got our facts right.”
The Centre for Policy Studies, a Conservative research group set up by Margaret Thatcher, said in a briefing note yesterday that a mansion tax would “raise very little money” as well as being “difficult and expensive to collect.”
All 74,000 homes above the 2 million-pound threshold “and presumably many more below the threshold” would have to be valued, and an average 20,000-pound levy would bring in only 1.5 billion pounds, the CPR said. “The U.K. already has by far the highest property tax take of any OECD country: property taxes contribute 4.2 percent of GDP compared to the OECD average of 1.8 percent. Within that, high-end property owners already pay a disproportionate amount.”
The Liberal Democrat chief secretary to the Treasury, Danny Alexander, told the conference today that “we need to get wealthy individuals to pay a fairer share” towards the government’s tax take.
“In this country, we tax work, effort and income too highly and unearned wealth far too little,” he said. “Now you can move your money offshore but you can’t move your mansion. That’s why we want a mansion tax. It’s simple, it’s fair, it’s unavoidable.”