Saturday, 10 March 2012

A Mansion Tax misses the spot!


Press release from the Labour Land Campaign

One of the aims of a Mansion Tax is to collect a share of the untaxed wealth the rich currently enjoy. However, its advocates fail to recognise why very expensive properties are so expensive: it is the location of a building that creates high property prices not the building itself.

Advocates of a Mansion Tax also fail to realise that many of the owners it aims to tax in this way will avoid paying it once introduced. It doesn’t take much nous to predict that overnight a £2.3million home would suddenly only be priced at £1.9million but with the contents priced at £.4million.

Vince Cable apparently fails to recognise what gives a property its value – the building value and the location value. The building value will always deteriorate as happens with all second-hand goods. However, the location value of any property (commercial or residential) is due to society’s overall demand to be located in that area. That demand is determined by a site’s accessibility to public transport, roads, schools, hospitals, other health care, leisure facilities, natural beauty, shops, employment/workforce etc.

Eleanor Firman, Chair of the Labour Land Campaign (www.labourland.org) says “It is society’s combined public and private investment that generates land values – not the owners of land who can - and do - leave land idle and still see it rise in value without lifting a finger.

Much better for the Government to abolish property taxes, increase the personal allowance on income tax, reduce VAT and introduce an Annual Land Value Tax on all land according to its optimum permitted use. This would immediately bring idle sites that blight our towns and cities into full use and reduce the demand for urban sprawl. The wealth that our taxes create would be returned to the public purse to maintain and develop our public services.”

ENDS

The Morning Star also covers this issues and covers the publication of the TUC's new report Is 50/50 fair? which looks at the 50p tax rate.

Here's a short excerpt:

According to the TUC the Treasury could raise more than the £3 billion it originally forecast from the 50p rate if it tackled tax avoidance.

Mr Barber added that calls to scrap the 50p tax are about the richest 1 per cent trying to dodge paying their fair share of tax and making everyone else pay more instead.

Left Economics Advisory Panel co-ordinator Andrew Fisher stated that lowering the 50p tax to earners on £100,000 and putting a 60p rate on those on £150,000 would be fairer.

He said: "We now need a real debate throughout the labour movement on fair taxation, to include new wealth and land value taxes, as well as reducing regressive taxation like VAT."

1 comment:

Phil said...

"Much better for the Government to abolish property taxes, increase the personal allowance on income tax, reduce VAT and introduce an Annual Land Value Tax on all land according to its optimum permitted use." - I'm quite sure Vince Cable agrees. But "politics is the art of the possible" and a mansion tax is presumably the best he thought he could get. It's the Tories that need convincing, and Labour who need to find the courage to attack council tax.