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Lib Dems Seek Alternative To UK Mansion Tax

by Robert Lee, Tax-News.com, London

20 January 2015


UK Deputy Prime Minister and Liberal Democrat leader Nick Clegg has indicated that his party now favors council tax reform over the introduction of a "mansion tax."

Clegg was quizzed about his party's tax plans on the BBC's Andrew Marr Show. When asked if he backed both the introduction of a "mansion tax" and new council tax bands for higher-value properties, Clegg stressed that the Liberal Democrats' approach is "very much a banded approach, in effect extending council tax bands."

According to Clegg, the party does not support "a single levy on the value of all properties above a certain value."

Clegg praised the band structure of the existing council tax system, but said that "it arbitrarily stops at around GBP700,000 (USD1m)." His solution, he said, would be to "treat properties at a very high value in the same banded way as we already do for properties at a lower value through the council tax system."

Sections of the Liberal Democrat Party have long campaigned for a mansion tax. In 2009, Vince Cable, who is now Business Secretary, suggested a levy of GBP5,000 on houses worth over GBP1m – a proposal that was later increased to GBP10,000 on houses worth over GBP2m. Cable's campaign continued after the formation of the Coalition Government in which the Liberal Democrats are the junior partner, and in 2012 he proposed an annual levy of one percent on the value of properties worth over GBP2m.

Other party members have sought to distance themselves from the proposals. In April 2014, Treasury Secretary Danny Alexander called for a "modest additional banded levy on top of council tax for high-value properties."

The Labour Party has instead taken up the mansion tax mantle. Both leader Ed Miliband and Shadow Chancellor Ed Balls have pledged the introduction of a new tax on "prime-value properties" worth more than GBP2m in 2014 prices. Balls in particular has said that the party would prioritize the implementation of the levy if it wins the May 2015 UK general election.

TAGS: tax | property tax | United Kingdom | tax thresholds | tax rates | tax reform

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