Add thelocalreport.in As A Trusted Source
keir starmer Being urged to stand to the left of your party as there is a fight within the government over its implementation mansion tax In next month’s budget – which some people may fear Deep impact on the housing market,
Chancellor, Rachel Reeves, It is understood that she is trying to seriously consider the proposal in her November 26 statement Not just fill the £40 billion black hole in its finances, but also finds room for more than £10 billion to deal with future shocks.
He and the Prime Minister are being warned that, with millionaire’s flight With Britain’s economy already hurting, a mansion tax would have a devastating impact.
Minister wants sir keer A source said, “It’s patriotism versus prejudice. What’s good for the country versus hatred of success and money.”
First, Independent It was revealed that the cabinet minister was already unhappy About abolishing “anti-aspirational” taxes and non-dom status, VAT on independent school fees.
The impact on London has been particularly severe and there is real fear among senior cabinet ministers that there could be a major flight of capital from the UK.
But now there is growing controversy over a new tax to punish the high-paid and wealthy, the so-called mansion tax.
The proposal, which has now come from Treasury minister Torsten Bell’s Resolution Foundation, would mean owners of properties worth at least £2m would face an annual charge of 1 per cent of the amount above that value.
It follows that revelation Ms Reeves is also being pressured to change 45p The highest rate of income tax for those earning more than £125,000, so as to raise more money and potentially induce more people to pay it.
The mansion house tax has the support of the increasingly left-leaning Labor parliamentary party, which has scuttled efforts to slash an out-of-control welfare bill before the summer. But it is understood that most of the Cabinet heavy hitters, including the Chancellor of the Duchy of Lancaster and former Chief Exchequer Secretary Darren Jones, Deputy Prime Minister David Lammy, Communities Secretary Steve Reid and Home Secretary Shabana Mahmood, are among those opposed to the new taxes, threatening aspirations.
However, trade unions have demanded a wealth tax, including a bank levy, and the Labor membership has voted Leftist deputy leader Lucy PowellThere are concerns that the Prime Minister no longer has the authority to stand on the left.
Former Tory Prime Minister and Chancellor Rishi Sunak has further increased the pain with his first column The Sunday Times, Warning that tax increases do not lead to economic growth.
He wrote: “Raising taxes would be a disaster for the UK – and particularly if the increases are focused on a narrow base as Reeves tries to comply technically with manifesto commitments. Such a tax increase would be particularly distorting and damaging to growth.”
Meanwhile, property experts are warning that the proposed mansion tax will hit the top end of the market and have a devaluing effect, leaving many people with negative equity.
There are also concerns that it would cause huge harm to people in London and the South East, where property values are much higher.
Simon Gammon, founder and managing partner of mortgage broker Knight Frank Finance, warned: “The government needs to get the property market moving again and talk of stamp duty, capital gains tax on main houses, and now a potential mansion tax will all slow down transactions even further.
“Their effort to build 1.5 million homes requires people wanting to buy, and developers will not want to build homes if there is no demand for them, and even though the mansion tax will apply to the top end of the market, we need all sectors of the market to function for a healthy property market.”
He also warned that with the mansion tax, Ms Reeves “will not get her money out of it quickly, as it will involve large amounts of assessment, which will cause significant delays and potential disputes. So if there were anything to do with the delayed revenue it is another negative impact on the property market.”
Timothy Douglas, head of policy and campaigns at Propertymark, which represents estate agents, said: “By concentrating efforts on high-value property, it will disproportionately impact people in London and the south-east of England, discouraging people from making property improvements or upgrades, and will not encourage older home owners, who often have larger, more expensive properties, for right-sized, families. And freeing up much-needed homes for those making the second move.
“With discussions around changes to both stamp duty and capital gains tax, ultimately, this may lead to a change in behavior and it depends on people who want to sell their property. The worry is that if many people now choose to stay put, it is unlikely that the Treasury will get the tax receipts they are expecting.”
Economists and tax experts have issued similar warnings.
Professor Stephen Millard, Deputy Director of Macroeconomics at the National Institute of Economic and Social Research, said: Independent: “This works to discourage people from increasing the value of their housing or upgrading. When you want to move from a flat to a house, you are more likely to be taxed, and so it will be more expensive, especially if you are paying tax every year.
“This is basically a big problem in London and the South East where house prices are much higher than they should be.”
Isaac Delestre, a senior researcher on tax at the Institute of Fiscal Studies, suggested that adding more council tax bands might be a better solution.
He said: “The problem is that all the banding is based on the 1991 value of homes. So unless you do a revaluation, which the Government absolutely should do, it will not be a very well-targeted tax. In London, in the South East, there are fewer properties in the top band that should be at the latest values. So it would be a very imperfect tool.”
Tax policy expert Dan Needle warned that more fundamental reform of property tax is needed by introducing a land value tax and abolishing council tax.
They calculated that an additional £3.6 billion could be raised if the top band of council tax was 12 times the amount of the lower Band A, rather than its current double Band A. However, this will go to councils, not the Treasury.
He also said that imposing a 1 per cent wealth tax on property worth £2 million or more would “require some degree of regularisation” when there has been no new assessment in 34 years.
In a policy paper, he said: “I think there is a strong case for Adding more multiplier-based council tax bandsI’m less convinced that a percentage tax makes sense given the administrative/assessment issues and the horizontal equity problem.
“The balance changes once we consider wholesale reform: replacing all council tax, business rates and stamp duty with a land value tax. In my view, the boost to growth and housebuilding that such a reform would provide more than offsets the negative aspects. But emphasizing a miniaturized version of such a tax as a net revenue raiser seems less attractive.”