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Ed Miliband's recent announcement that the Labour Party intend to table an Opposition Day Motion in support of the Lib Dem's 'Mansion Tax' proposal will not have been well received in Lib Dem HQ. However, when looked into in more detail, it appears to be a case of high politics taking precedence over the proposal of a well thought out economic policy. 

The Labour Party have said that the 'Mansion Tax' - basically a tax on property valued at over £2 million - would pay for the re-introduction of the 10p tax rate which was introduced and subsequently scrapped by New Labour when they were in power. Exactly what  form the tax would take seems to be up for debate, although reports have been made of a 1% levy on the value of each property valued at over £2m. 

There are two distinct considerations at play here. Firstly, whether the concept of a 'Mansion Tax' is a sensible one. Secondly, whether the way that Miliband Jr. has introduced the Labour version of the concept has been well handled. 

So - is the 'Mansion Tax' an economic runner? Superficially, it seems so - for those in society who have been hard working and fortunate enough to own a high value property to contribute more to the Exchequer seems fair. It would certainly be less onerous to implement than the much-maligned 'Bedroom Tax', as there are far fewer potential properties to value for the 'Mansion Tax' proposal. However, the criticism is that any tax which is based on the asset value rather than the income of an individual can lead to them being unable to  afford the levy owed. This, in turn, could impact disproportionately on those who for whatever reason live in an expensive home but live on a subsistence income. An example of this could be an elderly person living on her old age pension, in the family home which has become far more valuable due to other properties in the neighbourhood being sold for increasing values. Is it just that this person should have to sell and move to a smaller property if she does not have family to assist her in making the (annual, one would assume) tax payments? Certainly, with the population of the UK increasing, there is greater population pressure and as such one could make a case for this. However it is not an entirely palatable situation.

In terms of the Labour announcement, this again could be seen to be well handled. Superficially so, at least. The threat to the Coalition is predominantly symbolic, as an Opposition Day Motion has only ever been won once - that being on settlement rights for Gurkha veterans. However, the challenge to the Coalition is both real and fairly immediate, in that if the Government do not give Parliamentary time to the ODM Labour have said that they will table an amendment to the Finance Bill for the next budget. The political fallout for the embattled Lib Dems could be quite substantial, however, as it has been designed to drive a wedge between them and their senior coalition partners. Whatever the form of the vote on the 'Mansion Tax', it is likely to widen the rift between the Tories and Lib Dems - and this will prove problematic for the Lib Dem whips in particular.




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