Andrew Neather in the Evening Standard pulls no punches:
One alternative is to [tax] wealth rather than income — especially wealth that’s hard to hide*. Yet the Tories are outraged at Liberal Democrat proposals to do just that, via a “mansion tax” on properties worth more than £2 million. The value over £2 million would be taxed at one per cent: the owner of a £4 million house would pay £20,000 a year**.
Nationally, maybe 0.25 per cent of homes are in the £2 million-plus bracket; in London, estimates put them at between 1.2 and two per cent of the total. Just 1,518 such homes were sold nationwide last year. Vince Cable’s charge this week that the Tories oppose the tax because it would hit “their friends” looks like a pretty simple statement of fact to me.
Not that the mansion tax will ever happen: this is really about Lib-Dem positioning. And in any case it would be simpler to create new council tax bands. The highest band at present, Band H, is for houses worth more than £320,000 in 1991 — hard to put an average value on today, but less than £2 million. So at present, the millionaires at One Hyde Park pay council tax of £1,365 a year on flats worth up to £136 million.
By way of comparison, a report in yesterday’s New York Times highlights an $88 million apartment at 15 Central Park West that attracted property taxes of $59,000; without a complicated tax break, the tax would have been $145,000.
Critics point to the alleged plight of little old ladies in big houses — straw little old ladies, I fear — and to the potential flight of the super-rich. But are the latter really all going to condemn themselves to lives in Zug or Dubai? I think we should call their bluff.
* Of course what he means is "the rental value of land" rather than "wealth", but this confusion has been deliberately instilled into us over centuries by the land owning elite.
** £20,000 a year is approx. the average total tax bill for an average full time earner; income tax is only a quarter of all the taxes we pay. So it's hardly a huge figure.