So Danny Alexander, in his speech at the Lib Dem conference, said that a Mansion tax was “simple, fair and unavoidable”. Really? In what way is it simple? It could be that it applies to the total value of the house, not the amount of equity. Someone who has just bought a £3 million house with a £2.5 million mortgage would pay the same tax as someone who has an unmortgaged house worth £3 million. That might be simple, but is hardly fair. It’s also then not technically a wealth tax, it’s effectively a council tax. Also, the proposal would be that they pay 1% of the value over £2 million so a £3 million house would attract £10000 mansion tax plus about £2700 council tax. Someone with a £1.99 million house would simply pay the maximum council tax (about £2700). Again, hardly fair.
If you want to attempt to make it fair, then it should only apply to the equity over £2 million. Now it’s hardly simple. There’d need all sorts of documentation and people would need to submit annual returns. What about those who’s houses are owned by a company (that they own) rather than directly by themselves? What about those who remortgage and use the equity for something else? Now it seems neither simple nor fair. What about the claim, by Danny Alexander, that a mansion tax is unavoidable? How is this true? There are numerous ways to collect tax. We don’t have to consider a wealth tax, so it’s clearly not unavoidable. It might be preferable, but not unavoidable.
Basically, do the Lib Dems simply say whatever they think sounds good without thinking about it, or do they think about it and then assume they’ll get away with something that is clearly neither true nor sensible? Probably a combination of the two, sadly.