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A Mansion Tax would be a “big mistake” says Eric Pickles

by Sarah Halloran

Eric Pickles, the Secretary of State of Communities and Local Government has spoken out about the so-called mansions tax that is being supported by the Liberal Democrats.  In an interview with the Daily Telegraph, he talked about hardworking homeowners who “put a lot into this country and don’t take a lot out” and that the proposed mansions tax would be a “big mistake”.

“We as a Government have got to understand that middle-class families put a lot into this country and don’t take a lot out. It would be a very big mistake to start imposing taxation on the back of changes in property values, particularly with big regional variations… People will suddenly find themselves in a mansion and they hadn’t realised it was a mansion. If it is only going to be mansions, the kind of thing you and I would regard as a mansion, it ain’t going to raise very much.”

He also warned that the introduction of a mansions tax would require a huge amount of administration with a revaluation of property across the UK, a task that would cost in the region of £250 million.  Mr Pickles added  “It’s a red line for the Coalition.  The Coalition has said unambiguously that we won’t be revaluing in the lifetime of this parliament.”

So, another day, another tax, and once again it seems to be the wealthy who are targeted.  This time, however, it’s assets that are being put into the firing line rather than income.  Tim Mongomerie, a writer for the Conservative Home website raises a few points on what Eric Pickles had to say about mansions tax.

  1. The best option for the Coalition would be to reduce the overall burden of tax.  In the US, the Republicans realised that their nation had a problem with spending rather than taxing.  Britain has exactly the same issues and yet George Osborne has raised a portion of taxes including VAT, CGT, green taxes in addition to introducing a bank levy.  The UK hasn’t experienced a tax burden this high since WWII and it doesn’t seem to be helping economic recovery.
  2. If the overall burden of taxation isn’t reduced then the Government should address a rebalance of the tax system.  As Ross Douthat has written: “Conservatives need to recognise that the most pernicious sort of redistribution isn’t from the successful to the poor. It’s from savers to speculators, from outsiders to insiders, and from the industrious middle class to the reckless, unproductive rich.”
  3. There are more effective ways of taxing wealth than the Liberal Democrats’ mansion tax with a ‘Z’ council tax band being a possible remedy.

The wealthy have long been subjected to high taxes.  George Osborne is to be holding an assessment of how much money the 50p tax rate is actually generating.  The review, to be carried out by the Inland Revenue, will be expected to conclude by the end of the financial year.

Mr Clegg has said he supported the chancellor’s decision to review the tax, but last week said: “When living costs are high, when people are really feeling the strain, of course it is right to prioritise help, where you can give help, to the millions of people who need that help the most and not prioritise help to a very, very small minority of people who don’t need as much help – in other words, the people at the very top.”

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