Mansion tax would affect just four families in every thousand
A study compiled for the Evening Standard newspaper suggests that Labour’s proposed mansion tax would only be paid by 110,000 households, of which 86,00o would be in London.
This needs careful examination, as there is obviously a concerted campaign going on against this proposal.
First, DCLG statistics suggest that there are 27.7 million homes in the UK. The Mansion Tax would be levied on a small minority of very expensive properties worth more than £2 million. 110,000 households equates to 0.4 per cent of the UK total – just four households for every thousand.
Second, despite misinformation to the contrary, there is actually a very close association between owning a house worth £2 million and having a very high degree of income and other forms of wealth. In blunt terms, a mansion tax would be a tax on the rich.
Third, if there are a few cases where people own a very expensive home but have little income or other wealth then they can be easily exempted – taking due care to ensure that they are not merely part of a tax avoidance scam. People with low incomes receive substantial discounts from the council tax, for example. There is no reason why a few people in this kind of circumstance – and they can probably be counted on the fingers of one hand – cannot simply be exempted from the mansion tax.
Fourth, there is a charge made against the mansion tax that it will bear down harder on London. This is plainly a truism, simply because high incomes, massive wealth and expensive houses are all disproportionately concentrated in London.
These proposals should also be read in the knowledge that those who are very well-off are rather more likely to be able to find ways to minimise their tax liabilities than the rest of us. It seems right that the greater one’s wealth the more one should pay, but that is not always how it works out at the moment.
Thus a dispassionate observer would say that the mansion tax looks like a progressive measure based on sound principles of taxation.