Andrew Neather: A mansion tax isnt radical its impotent

Personally I cant muster much sympathy for the owners of 2 million homes even though that wont buy you a mansion anywhere in this city, as Miliband, owner of an NW5 house worth well over that, can himself testify. I doubt Labours plan will lose the votes of many Londoners who wouldnt already be voting Tory.

Still, Labour and the Lib-Dems reliance on this wheeze is testimony to politicians fundamental cowardice in dealing with the real problem: our completely broken system of local taxes.

Its right that there should be progressive taxation of homes, the main expression of most peoples wealth and one which is difficult to hide from the taxman. That is one original, theoretical principle of council tax, like the old system before it of local rates based on homes notional rentable values.

The problem is that council tax is still based on property values in 1991, the baseline year for when the tax was first introduced in 1993. The idea was to revalue properties every 10 years: it never happened. In September 2005 Labour postponed the exercise until after the next election, a move the minister responsible, David Miliband, cheerfully admitted was a vaulting, 180-degree, full U-turn. In 2010 the Tories followed suit, ruling out any revaluation in this Parliament.

This means illogicalities such as homes built since 1991 being given notional 1991 values. Much more serious, it locks us into a system incapable of registering the wild divergence of property values over the past two decades let alone of helping put a brake on soaring prices.

You can judge how big a cumulative tax cut the present system has handed the rich by considering that in 1990, the last year of the old system, the biggest London homes were paying rates of up to 10,000 a year (worth 21,700 today). Westminsters band H council tax this year? Just 1,353.48 (its nearer 3,000 in most boroughs.)

H is the highest of the eight council tax bands: politicians of all parties refusal to revisit the tax means that there can be no new bands added. They probably fret that higher property taxes might drive the rich away. Inexplicably, that isnt what New Yorks far higher, annually reassessed property taxes have done.

Instead, were offered a mansion tax. It isnt bold or radical. Its a sign of politicians impotence.

There was a symbolism to the Rockefeller Brothers Fund promising this week to phase out its holdings in fossil fuels: the family fortune was made by John D Rockefeller, founder of the oil company whose descendant is Exxon. The announcement was timed for yesterdays meeting of world leaders in New York to discuss climate change: more than 300,000 people marched in the city to demand action.

President Obama does now seem (fairly) serious about it though thats what people said when David Cameron cuddled huskies on the Svalbard ice in 2006. Since then, Cameron has junked even token environmental commitments, while the ice has shrunk: this week Cambridge Universitys professor of ocean physics said that the Arctic ice cap is in a death spiral. I dont want to get all apocalyptic like David Mitchell in his new novel, The Bone Clocks, with its nightmare vision of the 2040s post climate change. But time is running out.

See the original post:
Andrew Neather: A mansion tax isnt radical its impotent