There has been much debate in the media about whether the Government should introduce a ‘Mansion Tax’ , in particular if this were in exchange for cutting the 50p tax rate. I am merely posting this to stimulate that same debate here on the BUCF blog. Both arguments seem to have support across the whole political spectrum so I expect some difference in opinion even amongst the contributors to this blog.
Overall I think I prefer the Mansion Tax. I believe, probably along with the Treasury, that the 50p tax rate penalises success and encourages many to move their tax affairs abroad in order to avoid it. Also, many people will have taken action, suggested by the Institute for Fiscal Studies, to avoid paying the top rate of tax. It is as yet pretty unclear how much revenue has increased due to this higher rate of tax. The Treasury predicted that this figure should be about £5.3 billion.
There are various forms that a Mansion Tax could take: a national tax on the most expensive properties, a land tax or a new higher band of council tax. An advantage of the latter is that it would force foreigners, residing here and currently not paying income tax, to make a contribution. Some people argue that rich people would object less to a mansion tax compared to paying tax at the 50p rate. The only problem I see with a mansion tax is the point that Boris Johnson has made: it would be unfair on Londoners, given the price of property in the capital.
So, over to you – which is the fairest way to tax Britain’s richest?