The lesser of two evils
A few months ago Vince Cable shocked the richer end of middle-class Britain with his ‘mansion tax’. This was the suggestion that each house worth over £1m would, under a Lib Dem government, be taxed at 0.5% of its value every year.
Cue mutterings about the unfairness of such policies on the asset rich and income poor. And from the banking community, cue a pile of discounted cash flow spread sheets working out how much the new tax would wipe off the value of their Notting Hill homes (the answer being ‘a lot’).
After all that, the assumption was that Nick Clegg would quietly drop the policy. He hasn’t. Instead, they’ve just moved up both numbers – now it’s 1% over £2m. And Clegg and Cable aren’t the only ones wondering if UK property is under taxed.
This week, Monetary Policy Committee member Adam Posen seemed to suggest imposing capital gains tax on residential homes and then making it, along with stamp duty, variable. So the taxes would rise or fall with house prices. The idea would be for the taxes to become an “automatic stabiliser for house prices”.
Just how bad are these ideas?
• Read the full editor’s letter here: The lesser of two evils