Victory on the Mansion Tax

The Centre for Policy Studies is recognised to have led the intellectual argument against a Mansion Tax. We aredelighted that, this week at Birmingham, both the Prime Minister and the Chancellor of the Exchequer made a firm pledge not to introduce any such tax. Their reasons for doing so were based on arguments made in two recent Centre for Policy Studies papers.

These papers demonstrated, inter alia, that a Mansion Tax:

  • would raise little money
  • would be very difficult and expensive to collect
  • would penalise aspiration and wealth creation
  • would, over time, be likely to include lower valued homes
  • was rejected by Denis Healey in 1976 who later commented that: “We had committed ourselves to a Wealth Tax: but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle.”

These arguments were repeated by the Chancellor in an Interview with The Mail on Sunday:

“We are not going to have a mansion tax, or a new tax that is a percentage value of people’s properties. Before the election they will call it a mansion tax, but people will wake up the day after the election and discover suddenly their more modest home has been labelled a mansion,’ he says.

‘We don’t think people who have worked hard, saved up to buy a home, should be clobbered with a mansion tax.’

Adding a new tax band to the council tax for big homes is merely a sinister ploy to let tax snoopers get into people’s homes, he maintains.

‘You would have to send inspectors out [to revalue every home in the UK] and it wouldn’t raise much money,’ he says. ‘I’m not going to let the tax inspectors get their foot in the door.’

Osborne warms to his theme: ‘Nor will there be a wealth tax or annual tax on assets, temporary or otherwise. It is completely unenforceable. It would become a tax avoider’s charter.

‘We want to encourage wealth creators and make Britain a place where people want to invest. It is a complete economic delusion for Labour to say we are just going to tax the rich and that will deal with Britain’s problems – and the country knows it. It is not a them and us situation.”

And in his speech to the Conservative Party Conference, the Chancellor took up again the points made by the Centre for Policy Studies:

“But I am not prepared to contemplate things that make no economic sense and destroy jobs.

So we won’t have some kind of temporary wealth tax
Even Denis Healey thought that was a bad idea.

Our future lies as a country where wealth creation is not something to be penalised- but encouraged.

Nor am I going to introduce a new tax on people’s homes.

It would be sold as a Mansion Tax.

But once the tax inspector had his foot in the door you’d soon find most homes in the country labelled a “mansion”.

Homes people have worked hard to afford and already paid taxes on.

It’s not a Mansion Tax it’s a Homes Tax and this Party of home ownership will have no truck with it.”

Date Added: Thursday 11th October 2012