50p shift revives ‘mansion tax’ idea
By politics.co.uk staff
A property tax on all houses worth over £1 million is attracting renewed interest from Liberal Democrats as a replacement for the 50p rate of income tax.
The top rate is currently being reviewed by the Treasury amid concerns that insufficient revenues make it unjustifiable.
That has revived a Lib Dem proposal made by business secretary Vince Cable at the party's autumn conference two years ago.
At the time opposition from right-wing Lib Dems like David Laws forced Mr Cable to shelve the policy, but now the party is in government a hike in capital gains tax on the most expensive properties is once again becoming a possibility.
"If we do get rid of the 50p rate we need to make sure there is something else levied on higher rate payers," a senior Lib Dem aide was quoted by the Financial Times newspaper as saying.
"Lib Dems think there should be a new way of taxing wealth."
Many Conservative politicians and business leaders believe that the 50p tax rate drives business away from the UK and penalises entrepreneurs.
But Lib Dem chief secretary to the Treasury Danny Alexander has rebuffed their concerns, saying those considering scrapping the top rate were living in "cloud cuckoo land".
Now chancellor George Osborne appears to be laying the groundwork for a retreat.
"There is not much point in having taxes that are very economically inefficient," he said at the weekend.
"I have said with the 50p rate I don't see that as a lasting tax rate for Britain because it's very uncompetitive internationally, and people frankly can move."
