Ahead of Ed Miliband’s speech tomorrow, the BBC’s Nick Robinson is reporting that he will pledge to use Labour’s proposed mansion tax on properties worth more than £2m to increase NHS spending. Labour sources have described this as “speculation”, which isn’t a denial, and at a fringe event this evening, Ed Balls refused to reject the story. He told NS columnist and Huffington Post political director Mehdi Hasan that “all the things I wanted to announce in my speech today I did” (leaving the path clear for Miliband) and did not commit to using the revenue it would raise for deficit reduction.
Labour originally pledged to use a mansion tax to fund the reintroduction of the 10p tax rate, but in his speech today, Balls confirmed that this would now be achieved through the abolition of the Married Couple’s Tax Allowance introduced by the coalition. On a mansion tax, he said:
And we will levy a tax on the highest value properties – a mansion tax on houses worth over £2 million.
But we will do it in a fair, sensible and proportionate way. Raising the limit each year in line with average rises in house prices. Putting in place protections for those who are asset rich but cash poor. And ensuring those with properties worth tens of millions of pounds make a significantly bigger contribution than those in houses just above the limit.
Because how can it be right that the billionaire overseas buyer this year of a £140 million penthouse in Westminster will pay just £26 a week in property tax — the same as the average-value property in that area?
On the NHS, he said: “Conference, we saved our National Health Service from the Tories.
“And next year, after just five years of David Cameron – with waiting times rising, fewer nurses and a crisis in A&E – we will have to save the NHS from the Tories once again. And we will do what it takes.”
Using the revenue that a mansion tax and a super-mansion tax (on properties worth tens of millions) would raise gets Labour round the problem of how to increase NHS spending without a rise in general taxation, which the party regards as unfeasible at a time of falling living standards.
It would also be a politically potent act of redistribution, with a populist (and popular) tax on the wealthy used to safeguard Britain’s most cherished public institution. David Cameron vetoed the introduction of a mansion tax by the coalition on the grounds that “our donors would never put up with it”. Expect Miliband to make much of how the PM “stands up for the wrong people” when he speaks tomorrow.