Labour threw its weight behind the idea of a mansion tax last year, promising to use the revenue it would generate to reinstate a 10p rate of income tax. In an article for today's Evening Standard, Ed Balls has offered the most detailed outline yet of how the policy would operate.
First, he confirms that it would only apply to property values over £2m, with the threshold raised annually in line with average increases in house prices, rather than general inflation. This, Balls writes, would "ensure that more modest properties are not brought into the scope of the tax".
Second, he promises that there will be "protections in place" for those who are asset rich but cash poor (an issue of particular concern to Londoners). This would take the form of a relief scheme, or allowing those on low incomes to defer payment until the property is sold.
Third, Balls announces that Labour has abandoned the original idea of a 1 per cent charge on property values over £2m in favour of a banded system — £2-£5m, £5-10m, £10-20m and over £20m — that eliminates the need for detailed annual valuations and ensures the very wealthiest pay more. This brings Labour into line with the new position recently outlined by Danny Alexander, who pledged to implement the policy through the existing council tax system. The aim, a Balls spokesman told me, is to reassure people to that the tax would be introduced in "a fair and proportionate way".
With both the Lib Dems and Labour unambiguously committed to the policy, the Tories are left as the only party that believes that a family in a three-bedroom house in Tower Hamlets should pay the same rate of property tax as an oligarch in a Kensington palace. Those voters who select what James O’Shaughnessy, David Cameron’s former director of policy, calls the "dreaded posh family in front of a mansion" when asked to choose the picture that best represents the Tories have had all their prejudices confirmed. The irony is that it was George Osborne – who is now leading the charge against a new property tax – who agreed to introduce two higher council tax bands on houses worth more than £1m ahead of the 2012 Autumn Statement before being overruled by Cameron. It later emerged that the Tories had surreptitiously written to their wealthy donors soliciting funds to campaign against a “homes tax”, a fact that Miliband gleefully cites as proof that the Prime Minister “stands up for the wrong people”.
In the early months of the coalition, Labour MPs frequently complained of the "two-against-one" dynamic that allowed the Conservatives and the Lib Dems to trash the party's economic credibility, but on a mansion tax, and many other issues, it is now the Tories who are the odd ones out.