Ryan Bourne, Head Researcher for Economics at the CPS, wrote an article for this mornings City AM questioning the fairness of a Mansion Tax on those who are ‘income poor, assest rich’.
“LIBERAL Democrats are pushing for a mansion tax, in the form of an annual levy on houses worth over £2m. They claim this would raise significant funds for the Treasury, would “target” the super-rich and would be more economically efficient than taxing people’s incomes.
It’s depressing that some consider it the function of the tax system to “target” certain groups, rather than to raise funds for the provision of public services. That aside, the other arguments outlined above were busted in Taxing Mansions, a paper released by the Centre for Policy Studies on Monday. Examining Savills’s data book, we found that the tax would unsurprisingly penalise those whose property value happened to have substantially increased during their period of ownership, those often described as “income poor, asset rich”.
It would mainly be paid by people in London, many of whom are not foreign oligarchs with huge property portfolios, but have lived in the city for decades and may be cash-poor pensioners. Administering the valuation of the properties would be a nightmare. And the maximum it would raise in revenue would be around £1bn, when taxation of property already occupies a higher proportion of GDP here than in any OECD country.
A common response from the advocates of the mansion tax to this weight of evidence is to simply state that the policy is fair or the right thing to do. Fairness is the buzzword of politicians across the board, and it usually comes in the context of wanting other people to pay more tax.”
Click here to read the article in full
Taxing Mansions: the taxation of high value residential property, by Lucian Cook, is available for download here.
Date Added: Wednesday 7th March 2012