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U.K. Liberal Democrats Won’t Back Labour on Mansion Tax

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March 12 (Bloomberg) -- U.K. Business Secretary Vince Cable and his Liberal Democrat party backed away from a threat to vote against the coalition government on an opposition Labour Party motion calling for a tax on the most expensive houses.

Cable said late yesterday that even though he and the Liberal Democrats believe in such a “mansion tax,” they won’t side with the opposition in today’s vote in the House of Commons. Cable told BBC Radio 4 earlier in the day that he wanted to read Labour’s motion and the text of a government amendment before deciding how to vote.

“The Liberal Democrats will not support a Labour motion designed exclusively to play cynical party-political games,” Cable said in a statement released by his office in London. “The amendment also makes it clear that although we are in coalition with the Conservatives, we have different views on the desirability of a mansion tax.”

Labour called the mansion-tax debate in an effort to sow division between the two parties in Prime Minister David Cameron’s government a week before Conservative Chancellor of the Exchequer George Osborne’s annual budget. The proposed tax, a policy originally espoused by the Liberal Democrats, would be levied on properties valued at more than 2 million pounds ($3 million). The Tories oppose the tax.

In its motion, Labour calls on the government to introduce proposals for a mansion tax “to fund a tax cut for millions of people on middle and low incomes.” The party has said it would like to reintroduce a 10 percent starting rate of income tax.

Coalition Amendment

The government amendment notes the diverging Tory and Liberal Democrat views on the mansion levy and that the coalition has increased both the stamp duty on purchases of the most expensive real estate and the starting point for paying income tax.

Cameron’s spokesman, Jean Christophe Gray, told reporters yesterday that the prime minister “will expect, as always, government ministers to support the government.”

The vote isn’t binding and wouldn’t introduce a levy if Labour was to win backing in the House of Commons.

Labour Treasury spokesman Chris Leslie responded to Cable’s announcement by saying that “it would be astonishing if the Liberal Democrats failed to back a straightforward motion supporting their long-held policy of a mansion tax.”

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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