Labour’s announcement that it will bring in an annual mansion tax on all homes worth £2m or more to raise money for the NHS has been labelled a “political stunt’.
The British Property Federation was among the many critics of the move – described by Knight Frank as purely political. Other critics have said that the tax will pull in property rich but income poor people who have lived in homes for many years. Their homes have risen in value, but say pundits, these owners would be utterly unable to pay the tax.
Head of research at Knight Frank, Liam Bailey, said that one in ten homes whose owners would have to pay the tax are in London – but have just one or two bedrooms.
He said another 17% have three bedrooms, and that just 1% would be considered ‘mansions’ in the traditional sense, with ten or more bedrooms.
According to Bailey, there are about 110,000 homes in the UK valued at £2m or more.
Almost all – about 86.4% – are in London and the south east.
Bailey said: “It’s quite clear the objective of this is political.”
Knight Frank’s estimate of the number of £2m-plus homes is at the top end of the scale, with Hometrack estimating about 58,500, Savills about 97,000, and Zoopla 108,000.
According to Zoopla 96% of the burden of Labour’s mansion tax would fall on home owners in London and the south east.
Zoopla reckons over 85,000 home owners in London would be caught by the tax, and over 14,000 in the south east. After that, the numbers drop away sharply with, for instance, just 168 home owners caught by the tax in Yorkshire and the Humber, and 87 property owners in Wales.
It estimates that the tax would cost an average of £15,000 a year.
Lawrence Hall, of Zoopla, said: “It is somewhat misleading to call it a mansion tax when many three bed family homes in London and the south east would find themselves caught by it.”
The Labour party estimate that the mansion tax will bring in £1.2bn a year to fund the NHS.
Yesterday evening, on Radio 4, shadow health secretary Andy Burnham said the mansion tax would be introduced immediately on a Labour victory, with funds quickly going into the NHS.
However, he appeared stuck for an answer when asked how the homes would be valued, saying only that there already was an internal government valuations service.
Comments (1)
Most will have seen this but for those who haven't ….please pass on to Ed Balls.
Suppose that every day, ten men go out for beer and the bill for all
ten comes to £100.
If they paid their bill the way we pay our taxes, it would go
something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
The tenth man (the richest) would pay £59.
So, that's what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. 'Since you
are all such good customers,' he said, 'I'm going to reduce the cost of
your daily beers by £20 . Drinks for the ten now cost just £80.'
The group still wanted to pay their bill the way we pay our taxes so
the first four men were unaffected.
They would still drink for free. But what about the
other six men –
the paying customers? How could they divide the £20 windfall so that
everyone would get his 'fair share?' They realized that £20 divided by
six is £3.33. But if they subtracted that from everybody's share, then
the fifth man and the sixth man would each end up being paid to drink
his beer. So, the bar owner suggested that it would be fair to reduce
each man's bill by roughly the same amount, and he proceeded to work
out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid £2 instead of £3 (33%savings).
The seventh now pay £5 instead of £7 (28%savings).
The eighth now paid £9 instead of £12 (25% savings).
The ninth now paid £14 instead of £18 (22% savings).
The tenth now paid £49 instead of £59 (16% savings).
Each of the six was better off than before and the first four
continued to drink for free, but once outside the restaurant, the men began to
compare their savings. 'I only got a pound out of the £20,' declared
the sixth man. He pointed to the tenth man, 'but he got £10!' 'Y eah,
that's right,'exclaimed the fifth man. 'I only saved a pound, too.
It's unfair that he got TEN times more than I!'
'That's true!!' shouted the seventh man. 'Why should he get £10 back
when I got only two? The wealthy get all the breaks!'
'Wait a minute,' yelled the first four men in unison. 'We didn't get
anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine
sat down and had beers without him. But when it came time to pay the bill,
they discovered something very important….they didn't have enough
money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how
our tax system works. The people who pay the highest taxes get the most
benefit from a tax reduction. Tax them too much, attack them for being
wealthy, and they just may not show up anymore. In fact, they might
start drinking overseas where the atmosphere is somewhat friendlier.