Feb. 20 (Bloomberg) -- U.K. Deputy Prime Minister Nick Clegg said he’d consider opt-outs from a proposed tax on houses valued at more than 2 million pounds ($3.1 million) for long-term residents, suggesting the levy could be paid after death.
Clegg’s Liberal Democrats, the junior partners in Prime Minister David Cameron’s coalition, have advocated such a “mansion tax” as a key policy, arguing it would help discourage investment in property and raise money from the wealthy. He’s seeking to convince Cameron’s Conservatives, who oppose more property taxes, to back the measure.
The deputy premier was challenged on his weekly LBC radio phone-in show by a north London resident who said his property had rocketed in value over the past 20 years to 5 million pounds and he would have to sell his home to pay any future tax. Replying, Clegg said he would look at opt-outs from the plan to charge a 1 percent annual tax on the value of the home above 2 million pounds.
“Of course you could make an exception for those people who have lived in those properties for long periods of time, have retired, and obviously aren’t in a position to pay that kind of levy every year,” Clegg said. “You could pay when it’s part of your estate, for instance.”
Clegg said this month he had been unable to convince his Conservative coalition partners to adopt his proposal. Critics argue it would displace families and that stamp duty, the tax on house purchases, already acts as a revenue-gatherer on high-end properties.
“Obviously I am not urging you on radio to sell your home, but if you do decide to sell your home you would be millions of pounds better off, because you have a small mortgage from 20 years ago and that in a sense is pure profit,” Clegg told the caller.
“Of course we can make sure that people who are income-poor but asset-rich are not clobbered by a mansion tax,” the deputy prime minister said.
Last week, the main opposition Labour Party said that if elected it would adopt the Liberal Democrat policy on the mansion tax and use it to pay for the restoration of a 10 percent income-tax band for low earners that the previous Labour government abolished.
The Liberal Democrats are a possible coalition partner for Labour after the next election in 2015.
Clegg called the move “blatant plagiarism” today.
Labour has said it wants to force a vote on the mansion tax in Parliament and may seek to amend the finance bill setting out the measures Chancellor of the Exchequer George Osborne will announce in his March 20 budget to do so.
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