When is a mansion tax not a mansion tax?

When is a mansion tax not a mansion tax?

It’s never been clear to me, since the few years ago that Liberal Democrats first proposed it, how, exactly, it is supposed to work and I’ve found Labour’s sudden attachment to the notion equally confusing and evasive.

I kept wondering: is it an annual or a one-off payment; whose coffers is it to fill, Local Governments’ or Treasury Central’s? I kept thinking: for goodness’ sake! just reform/adjust the council tax bands and/or the stamp duty thresholds.

The explanations have been reluctant, confused and piecemeal, largely because, as usual, some vague idea has been plucked out of the air and labelled by a not so bright spark and, realising how stupid it sounds on elaboration, have had to make adjustments as they’ve gone along. Well, it turns out that it’s not necessarily a new and separate tax at all. Or even specifically a mansion tax. Or it might be. Sort of.

Labour says it wants its version to be an annual tax, of ‘progressive’ levels according to property value. Who collects it, I can’t tell but, as they appear to want to differentiate between a mansion tax and the common or garden council tax, I suspect the Eds are not quite as keen on devolved power as they do profess and are hoping to pop it into their central budgetary costings. Who knows, perhaps Labour only pays lip service to ‘Localism’.

The Lib Dems have rushed to modify their policy, since Labour stole their idea. They, too favour banded levels but they do at least say it should be incorporated into existing Council Tax in order to minimise bureaucracy. So it isn’t really a mansion tax any more. One might assume that this means collected by local government though I’ve yet to hear it explicitly stated. But hey, it’s the Liberal Democrats – the gap between what they say and what they’d do is anyone’s guess so it probably doesn’t matter.

Perhaps there is an argument for all property tax to be collected by the Treasury. I suppose it depends on your view of devolved power and whether you believe that each tax is, or should be allocated for specific purposes, or that it should go into one big, flexible government spending pot.

If one is asset rich but income poor, it’s apparently going to be deferrable until sale or death. This implies that it can be a one-off payment – though absolutely not a death tax. Hmm.. I saw the look of horror on some politician’s face when the comparison was put to him. Maybe it could be viewed more as a vicarious or extra capital gains tax for the owner-occupiers’ inheritors. Ironic, given there would have been no capital gains had the owner sold it while still an occupant. And how much of the property’s capital will be left after sale if death comes not for several years? And if it is sold or leveraged by the owner/occupier to pay for social care, say, will there be sufficient funds to cover that care and the deferred tax bill? Which will the State say has seniority? It made me wonder, too: with talk of devolutionary power being fashionable and the argument that councils should have the capacity to borrow (to build social/council housing, for example), will we start to see local government doing so, based on the theoretical derivatives of the privately owned assets of a local, relatively wealthy electorate? Maybe I’m letting my imagination give me the run around…

As a tangential aside.. Does one own one’s property or not (Crown notwithstanding) if more payment is demanded after payment has been made in full? Is freehold just a fancy term for a lease, now? Come to that: if the State can just arbitrarily swoop in and acquire a cut, does one ever actually own outright, any asset one has paid for or inherited? A family home, jewellery, art, etc…? I’m not talking about the landed gentry stereotype. They’re in a class of their own and I doubt we’d let their privileged circumstances exist if we were starting from ‘here’. I’m talking about the rest of us – we, who are expected to aspire, save, invest, insure ourselves.. we, who wish to create heirlooms, bestow material gifts.. we practical but often sentimental creatures. One can argue about whether people should or even need to own property at all but utopian philosophy is not much help when the fact is that many do own property and many others still hope to. Whether there will be any point in striving to own is more pertinent, given the policy directions of the Coalition partners and Labour’s intended facsimiles. But I have digressed into a future post..

This mansion tax is a farce; just another manifestation of slippery, ill-considered, populist nonsense. Why even call it that? The term ‘mansion’ has been jumped on by those who want to appear like they care about the poor: by those who think that playing envy-politics to a captive angry audience with a blanket punitive policy is a justified approach – that very same blanket punitive policy attitude that has been used to undermine the poor and vulnerable at the other end of society’s economy. And, just to hammer home this point, Cameron’s crew frames it as “a wealth tax”. Appealing to the ‘politics of envy’ is just really another twisted version of the race-to-the-bottom mindset. It is just as bad as appealing to the politics of ‘deserving’. To the LibLabCons, the danger in deliberately encouraging insidious societal divisions would seem to be a lesson they are incapable of learning or even taking seriously and we can’t afford such politicians.

What a difference; what a breath of fresh air if ‘they’ could just say: look, we realise that our current Council Tax property banding no longer reflects or accommodates the extraordinary range and rise in house prices and their subsequent taxable value. We realise we do not need yet another gimmicky tax to further complicate our already ridiculously complicated tax system and, to this end, we intend to make appropriate adjustments to the existing mechanism. Once the debate is settled over how homes should be valued in the first place and by whom, of course. I notice none of the parties wants to properly address how and why housing generally (like everything else) is so obscenely expensive in the first place that so many ‘mansions’ are not mansions at all and how many more not-mansion mansions there will be if the Neoliberals remain in charge.

Mansion tax, my eye. It’s an empty ideological gesture; an unnecessary populist stunt.

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