Vince Cable has been dropping heavy hints about raising taxation over the last few days, so it is not a tremendous surprise to see him and Clegg calling for a tax on the value of properties above £1m.
I will blog in more detail later, but initial responses? Firstly, it is regrettable that this is yet another badly handled stunt announcement which has bypassed the policy committee, but it will surprise no-one to hear me say that I believe it to be a step in the right direction. It doesn’t go anything like far enough though. 0.5% on properties above a £1m threshold? So a £2m valued property would be looking at a £5,000 tax. Chickenfeed for the people who have profited from a property bubble for decades.
It won’t raise very much – £1.1bn. Why, when it comes to public services is the emphasis all on “savage” cuts, yet when it comes to wealth taxes we are taking such baby steps? There is a real cognitive dissonance between the two approaches. We should go further and ideally the tax should be on land values rather than property prices (although if we want to introduce something immediately, the latter will be easier and it can be replaced by a land value tax over time). Even Centre Forum, the holders of the Orange Book flame, are calling for a 1% property tax (plus scrapping exemption of capital gains on property), which they would estimate would raise £6-10bn annually (pdf). That sounds like a good compromise to me.
The right, no doubt, will start hopping up and down and denouncing this as a tax on “aspiration.” What are tuition fees though, if not a tax on aspiration? Vince is currently calling for benefits to be scrapped for all middle income earners – families in particular. If that isn’t effectively a tax on aspiration, what is? They need to get serious and stop realise that aspiration is not a luxury that only the rich can afford.
Anyway, I need to digest this. In particular, I need to read what Vince has to say in ALTER‘s new pamphlet The Case for a New People’s Budget.