Nick Clegg, Liberal Democrat leader, announced on Monday that the Lib Dems will double the rate of their proposed ‘mansion tax’.
The party have dubbed the move the ‘most radical, far-reaching tax reform in a generation’. It appears to be a damage limitation exercise after the uproar caused when Vince Cable announced a 0.5% levy on all homes over £1m.
A large number of Lib Dem MPs have raised their concerns over the proposed tax move, designed to pay for income tax cuts, as they are worried their election prospects in London could be severely damaged as the majority of the taxpayers due to be hit by the extra levy live in London and the south of England.
The value threshold has been raised to £2m, meaning 180,000 properties will no longer liable. It is thought this will eliminate any poorer pensioners living in large properties.
It is believed that 70 – 80,000 properties will now be prone to the 1% annual levy. It is thought this ‘mansion tax’ will generate an estimated £1.7bn for the Treasury.
The Lib Dems have said that the ‘mansion’ tax will eliminate income tax for approximately four million low paid workers and pensioners completely as the threshold for income tax would rise to £10,000.
Good news for those who will no longer have to pay income tax but bad news for people living in large properties as they will have to subsidise the poor.
Clegg said however that:-
‘If you work hard, if you take initiative, you are rewarded. It does bear down on unearned wealth.’
Are they trying to suggest that all homeowners with large properties have not worked hard to earn them?!
Clegg compared their tax proposal with the plans set out by both the Conservative and Labour parties saying that their proposal is the fairest.
“Gordon Brown has created a tax regime that forces some of the lowest earners in society to pay hundreds of pounds in tax they can’t afford, while polluters and rich tax dodgers avoid paying their fair share.
Meanwhile, the Conservatives want tax cuts for millionaires but say there might be tax rises for everyone else.”
In all honesty, none of the systems seem fair. Surely the fairest way of charging tax is for everyone to pay the same flat rate. In that instance, if you work hard you are rewarded for your efforts by having a higher disposable income and if you earn less then you are still paying less tax – just at the same percentage of everyone else.