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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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.