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Can the right be persuaded to back a "mansion tax"?

ConservativeHome editor Tim Montgomerie says the right should support higher property taxes.

By George Eaton Published 18 August 2011 15:22

Tim Montgomerie has a typically thoughtful piece in today's Guardian on social justice and the coalition. The ConservativeHome editor points out that the right has accepted significant parts of the Blair-Brown settlement - a ring-fenced NHS (at least in theory), higher international development spending, the minimum wage, a panoply of pensioner benefits - and asks if the left can make similar concessions. He writes: "[C]an the left acknowledge the harm caused by family breakdown? Can Labour politicians get to the point where they agree that single parenthood is sometimes wonderful, often unavoidable but rarely ideal?"

As luck would have it, this week's New Statesman is on that very subject. We asked ten left-wing politicians and thinkers, including Spirit Level authors Kate Pickett and Richard Wilkinson, Marc Stears, Diane Abbott, David Lammy and Melissa Benn, to address the issue of family breakdown and you can read their responses in the new issue (out today in London and in the rest of the country tomorrow).

Blue Labour thinker Marc Stears, for instance, writes:

For far too long, many of us on the British left have spoken to the country like washed-out tutors of Marxist social science. All questions of family breakdown, domestic abuse and personal ethics have been rendered as issues of material distribution. Problems have been presented as the all but inevitable outcomes of inequalities in income, wealth or opportunity and their solutions said to lie almost exclusively with the redistributive power of the state ... The call to re-engage with the family presents the perfect moment for us to put this oversight right.

In his Guardian article, Montgomerie argues that we must rebalance the welfare state in a pro-family direction. As this week's NS leader noted, a remarkable number of the coalition's benefit cuts - from the abolition of baby bonds and the Health in Pregnancy Grant to the three-year freeze in child benefit - hit families hardest. In addition, as I revealed last month, Cameron has broken his promise to protect Sure Start, a lifeline for low income families, and 20 centres have already been closed. By contrast, benefits for the elderly - free TV licences, free bus passes, the winter fuel allowance [WFA] - have been ring-fenced for entirely political reasons (the elderly vote more than any other age group). Montgomerie proposes means-testing the WFA (80 per cent of recipients are not in fuel poverty) and investing savings of £2.2bn in early intervention programmes. It's a stance that Labour's boldest thinkers, most notably James Purnell, will be sympathetic to.

But Montgomerie also wants the right to make some more concessions of its own. He calls for greater taxation of wealth, including high-value properties, and supports a version of Vince Cable's "mansion tax". Britain, he writes, has taxed income too heavily and wealth too lightly.

It's a subject that the New Statesman has devoted considerable attention to over the past year. In a cover story published in October 2010 ("The coming battle over land and property") NS editor Jason Cowley argued for a new model of taxation that shifts the burden of taxation from earned to unearned income; from taxes on income and consumption to those on property, inheritance and land.

In our leaders, we have 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.

As the coalition's internal debate on taxation continues (the Lib Dems want the 50p rate to be replaced with a range of new property taxes), it's encouraging to see one of the right's brightest thinkers take up this agenda.

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Tags: Property taxes Vince Cable Liberal Democrats

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16 comments

Thu, 2011-08-18 15:55 — charlesfrith

Big society is about plutocrats withdrawing their blood funnels from jamming the life out of vast under-classes in society..

Thu, 2011-08-18 16:16 — Shinsei67

Taxing unearned wealth (such as rises in property prices) is a no-brainer.

The right support it as it is more economically efficient to tax unproductive assets rather than taxing hard work.

The left support it as benefitting from higher property prices is patently unfair.

Yet, apart from small rises in stamp duty (which the super rich avoid by buying through offshore companies, why UKUncut never mention this is beyond me) neither left nor right have ever wanted to grasp the nettle of higher property taxes.

One wonders if it is because those tribunes of progressive politics like Chris Huhne and Will Hutton have large buy-to-let property empires.

Thu, 2011-08-18 16:43 — Marxist Nutter (not verified)

Marxist Social science has more to teach us now than ever....It's a shame Labour have taken a baby and bath water approach to the application of Marxisn theory to 21st century problems...Although not everything is determined by economics, ignoring material conditions of social phenonmenia is a very lazy approach to social science indeed.

Thu, 2011-08-18 16:58 — Dark Heart of Toryland (not verified)

Considering how regressive taxation is in the UK, surely a mansion tax should be introduced in addition to the 50% rate, not instead of it.

Thu, 2011-08-18 16:59 — Suzanne (not verified)

The coalition have not accepted what Montgomerie claims. Minimum wage, other employment rights and the 50p tax rate are all in the firing line as soon as is politically expedient. Genuine social justice is not a Tory or Lib Dem for that matter priority.

Thu, 2011-08-18 17:19 — Shinsei67

"Considering how regressive taxation is in the UK"

In what possible way is the UK's tax system regressive ?

Third highest upper rate tax rate in the developed world at 50p. The 40p tax rate cuts in a lot lower than our European peers.

No tax until £7,500 (rising to £10,000 by 2015).

And almost 50% of income tax coming from the top 10% of earners.

Throw in VAT at the European average.

How is this possibly regressive ?

Thu, 2011-08-18 18:52 — Shinsei67

@ mcquade:

I think it would be fair to say that proposals to tax property higher has not been at the forefront of economic debate for much of the last twenty years.

Hence the surprise when the LibDems suggested a Mansion Tax ahead of the last election.

I certainly haven't read all of Hutton's stuff, but I've read enough to know that higher property taxes have never been a major issue he has advocated.

It just seems a little odd that politicians are happy to advocate higher income taxes on those earning more than them (often undeserving folk like bankers) but are reluctant to see their million pound properties taxed.

Thu, 2011-08-18 18:46 — Shinsei67

mcquade:

"UKUncut has mentioned it many times."

No mention of it anywhere on their website. It isn't a UKUncut target for instance.

I debated with a senior UKUncut person on the Guardian CiF boards recently and he admitted he knew nothing about this form of tax avoidance and would investigate further.

Thu, 2011-08-18 18:09 — mcquade

"stamp duty (which the super rich avoid by buying through offshore companies, why UKUncut never mention this is beyond me)"

UKUncut has mentioned it many times.

Thu, 2011-08-18 18:19 — Paul McCrystal (not verified)

You say that the winter fuel allowance has been ring-fenced yet the BBC states that "The government is cutting winter fuel allowances from £250 to £200 for those aged 60-80 and from £400 to £300 for the over 80s." - http://goo.gl/NmHrC .

Which is correct?

Thu, 2011-08-18 19:35 — Luddite (not verified)

'Can the right be persuaded to back a "mansion tax"? It all depends on what you call a mansion!!

"Britain must confront a taboo – our refusal to tax property." So council tax isn't a tax on property? mcquade: please explain.

Thu, 2011-08-18 19:49 — Shinsei67

""Britain must confront a taboo – our refusal to tax property." So council tax isn't a tax on property? mcquade: please explain."

And of course stamp duty is a tax on property too. And a very progressive one at that.

Thu, 2011-08-18 18:27 — mcquade

If Will Hutton shies away from property taxes, then he must have written this in a moment of absent-mindedness.

"Britain must confront a taboo – our refusal to tax property."

http://www.guardian.co.uk/politics/2011/jan/23/ten-ideas-for-better-britain

Nick, unless you're sure you've read all he has written, it may be wise to refrain from slinging mud.

Thu, 2011-08-18 19:59 — Hugh Markey (not verified)

After 'oh so' many years and it seems the UK has a housing stock where no more that 20% of homes have in excess of four bedrooms.
Whilst Mrs T was busy flogging discounted council houses to tenants,tenants' near relatives or housing associations, canny private owners were turning 'two-up and two-down' accommodations into flats. And building speculators were busily cramming extra housing into back and front gardens; besides down-sizing houses into 'apartments' and 'flats'.
The new housing specs must have been designed by Lilliputians.
The UK went from providing just above average living space for a family to providing less space than even the USA.
Mansion tax? Let's see how this move affects the Nom-Dom squatter.

Landlord

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Fri, 2011-08-19 12:25 — Stuart (not verified)

Yup, bring in a Land Value Tax (LVT):
http://www.landvaluetax.org/
There is a lot of argument between the left and right about a lot of things: levels of redistribution, private or public provision of services, levels of individual liberty etc but I find it annoying when there is a policy that should be supported by both the left and right it is often completely ignored. As a rightie I like a LVT because: it is easy and cheap to administer; it takes taxes from people who have not earned it by providing goods and services other people value; it encourages the most economic use of land (the one resource it is very hard to increase the quantity of); it should encourage the private sector regeneration of the north by taxing the high land prices in the south; it is a vastly better tax than many other we levy, such as income tax, national insurance, council tax which we could reduce or remove. The left on the whole like a LVT as well (they can explain why).

The trouble is the same as it always is with politics which often makes the arguments between left and right meaningless. The real way government is conducted is less through ideology but through vested interests. In this case the vested interests are those of the multiple property owners. Most of the upper eschelons of all the main parties own multiple properties and do not want to see higher taxes on them.