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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Paul Nuttall is like his party: sad, desperate and finished

The party hope if they can survive until March 2019, they will grow strong off disillusionment with Brexit. They may not make it until then. 

It’s a measure of how far Ukip have fallen that while Theresa May faced a grilling over her social care U-Turn and Jeremy Corbyn was called to account over his past, the opening sections of Andrew Neill’s interview with Paul Nuttall was about the question of whether or not his party has a future.

The blunt truth is that Ukip faces a battering in this election. They will be blown away in the seats they have put up a candidate in and have pre-emptively retreated from numerous contests across the country.

A party whose leader in Wales once said that climate change was “ridiculous” is now the victim of climate change itself. With Britain heading out of the European Union and Theresa May in Downing Street, it’s difficult to work out what the pressing question in public life to which Ukip is the answer.

Their quest for relevance isn’t helped by Paul Nuttall, who at times tonight cast an unwittingly comic figure. Pressing his case for Ukip’s burka ban, he said earnestly: “For [CCTV] to work, you have to see people’s faces.” It was if he had intended to pick up Nigel Farage’s old dogwhistle and instead put a kazoo to his lips.

Remarks that are, written down, offensive, just carried a stench of desperation. Nuttall’s policy prescriptions – a noun, a verb, and the most rancid comment underneath a Mail article – came across as a cry for attention. Small wonder that senior figures in Ukip expect Nuttall to face a move on his position, though they also expect that he will see off any attempt to remove him from his crown.

But despite his poor performance, Ukip might not be dead yet. There was a gleam of strategy amid the froth from Nuttall in the party’s pledge to oppose any continuing payment to Brussels as part of the Brexit deal, something that May and Corbyn have yet to rule out.

If May does manage to make it back to Downing Street on 8 June, the gap between campaign rhetoric – we’ll have the best Brexit, France will pay for it – and government policy – we’ll pay a one-off bill and continuing contributions if need be – will be fertile territory for Ukip, if they can survive as a going concern politically and financially, until March 2019.

On tonight’s performance, they’ll need a better centre-forward than Paul Nuttall if they are to make it that far. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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