London Evening Standard/London
Tens of thousands of Londoners face being hit with a “mansion tax” on homes worth more than £2mn under a banded system imposing heftier levies on the more expensive properties.
The Liberal Democrats and Labour are backing imposing an extra tax on wealthy homeowners, the vast majority of whom live in the capital or the south-east.
Currently, the LibDems’ policy is a 1% levy on homes worth more than £2mn.
The extra charge would apply to the proportion of the property over £2mn. But as revealed by the Standard in September, senior LibDems are examining a banded system which could see homeowners pay more if their property was worth £2mn, £3mn, £4mn or £5mn.
Danny Alexander, the LibDem chief secretary to the Treasury, is also considering whether the “mansion tax” should be a flat rate for a home in a particular band, for example between £2mn and £3mn, rather than a 1% levy.
Such a system, which could be added to the collection of council tax, would be simpler than a 1% levy but could be seen as less fair.
Tory chairman Grant Shapps condemned the proposal. “Both Labour and the LibDems are proposing a so-called ‘mansion tax’ which everyone knows will quickly become a homes’ tax on ordinary hard-working families,” he said. “There is no reason why people should be clobbered just because they live in an area like London with high property prices.”
Former minister Bob Neill, Conservative MP for Bromley and Chislehurst, also criticised the proposals. “It’s ill thought-out, economically foolish and would discriminate against London,” he said.
However, a senior LibDem source stressed senior Conservatives had made clear they wanted to address the budget deficit through spending and welfare cuts rather than tax rises.