The Lib Dems' new property tax plan

Clegg and Cable push for a new tax on profits from first homes above £1m.

George Osborne has long made it clear that he regards the 50p tax rate as a "temporary" measure that will be abolished as soon as politically possible. As I noted earlier this year, Osborne has pencilled in 2013 as the earliest opportunity to remove the top rate. One of the most interesting debates in the coalition at the moment is on what (if anything) should replace it.

Both Nick Clegg and Vince Cable believe that the 50p rate should be replaced with a range of new property taxes and details of their plans are beginning to emerge. As today's Daily Mail reports, rather than a version of Cable's "mansion tax", the Lib Dems are now pushing for the introduction of capital gains tax on profits from first homes above £1m. Alongside this, they plan to reduce VAT on home improvements to 5 per cent (to encourage owners to renovate rather than to sell) and scrap stamp duty for low earners.

The move is part of a distinctly liberal attempt to shift the burden of taxation from earned income to unearned wealth (property, inheritance and land). Taking their cue from John Stuart Mill, the Lib Dems believe that the tax system should do more to reward merit, enterprise and innovation. As Vince Cable put it in his essay for the New Statesman on reclaiming Keynes, taxation should be diverted away from "profitable, productive investment" and towards "unproductive asset accumulation".

The NS has long argued that there are strong, principled and pragmatic arguments for higher taxes on property. As a recent editorial noted:

These automatically apply to largely untaxed foreign owners, target the source of much unearned wealth and are harder to avoid than taxes on income. In addition, they reduce the distorting effect that property speculation has on the economy.

On taxation at least, the Lib Dems can now claim to be exerting serious influence on the Tories. Osborne has embraced their plan to raise the personal allowance to £10,000 by the end of this parliament and is now set to restructure the taxation of top earners along liberal lines.

It remains unclear what stance Labour will take on this issue. During the leadership contest, Ed Miliband consistently argued for a "permanent" 50p rate but he has since modified his stance. He now merely says that abolishing the top rate is not a "priority" for him and that he will not take decisions on taxation this early in the parliament.

But having fought so long for a new top rate, many in Labour, including Miliband, will be reluctant to change course now. The tax is an important symbol of the party's commitment to a more equal society and pollsl show that it is popular with the voters. A recent Sunday Times/YouGov survey, for instance, found that 33 per cent think the top rate should eventually be brought down, 49 per cent think it should be made permanent and 51 per cent would like to see the threshold brought down to £100,000, with 29 per cent opposed. But electoral considerations aside, there is little doubt that the Lib Dems' bold agenda will require a more intellectually rigorous approach from Labour.

George Eaton is political editor of the New Statesman.

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.