Labour’s proposed mansion tax is a clumsy attempt at a long-overdue reform (The Economist)

CPS report “The Shrinking Case for a Mansion Tax was mentioned in The Economist magazine. Author Lucian Cook was also quoted (publish date February 21 2015). 

To read the full article, visit The Economist website

“This week two think-tanks, the Centre for Policy Studies and the Centre for Economic and Business Research, joined the celebs in bashing the proposal.”

“Some complain of regional iniquity: four-fifths of houses caught would be in London, according to Lucian Cook of Savills, a property company. Opponents like Ms Klaas point out that in the capital, £2m buys you far less than a mansion. That does not worry economists, who measure wealth with prices, not floor space. And Labour would allow cash-poor grannies to defer payment until they sell or die.

Labour has not said how it would tax the most valuable homes, but Mr Cook’s sums suggest the bill might reach as much as £125,000 on a £20m property if Mr Balls is to hit his revenue target. Mr Cook says that seems punitive. But as a proportion of the value it is not far from what the average homeowner pays in council tax. A bigger problem is implementation: the difficulty in valuing expensive homes means that owners may dodge the tax or ring their lawyers. A tax that suddenly appears at £2m is clumsy and could distort incentives: developers might well try to avoid crossing the threshold.”

To read the full article, visit The Economist website

Date Added: Friday 20th February 2015