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DAMESATHOME@YAHOO.CO.UK
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Friday, 29 November 2013

"THE MANSION TAX IS A NASTY TAX" SAYS NICK PAGET-BROWN


One of the negative effects of a forced coalition is having a limited pool of talent to draw upon. 
Just look at the LibDem end of the coalition...what a bunch of nonentities!
An ex National Parks PR man, Danny Alexander running our money and the very mediocre, ballroom dancing economist, 'Doctor' Vince Cable as Business Secretary.
The Dame watched Vince, in front of the Commons Committee, trying to justify giving away Royal Mail 'on the cheap'....it was just squirm making... 
A real couple of buffoons in charge of the economy!

No wonder their idea of a Mansion Tax has attracted scorn from civil servants. 
Even Tessa Jowell says it just won't work.
The Dame's attention was drawn to an excellent piece in Conservative Home by Nick Paget-Brown. It's well worth reading...good stuff, Nick.

PAGET-BROWN IS RIGHT ON THIS
On taking power in 2010, the Coalition was faced with an almighty mess. Some very difficult decisions have had to be taken to clear that mess up.  Part of the problem was an addiction to ever higher taxes and borrowing and a lack of willingness to consider value for money, cost-effectiveness and entitlement. Saying “stop” is rarely popular, but that is what responsible Governments have to do.
Now with elections appearing on the horizon, we find Labour and the Lib-Dems both promoting a Mansion Tax. The two versions are pretty much the same: an annual one per cent charge on the value of a home above £2 million.  The only real difference is that Labour promises to hypothecate the extra revenue in order to re-create the 10p tax rate they abolished in 2008.
In publicity promoting his tax, Vince Cable indicates that it is aimed at “some of the world’s wealthiest people who own property in the UK worth millions…”.
According to Ed Balls, once part of a Government that proclaimed itself relaxed about people getting “filthy rich”, the tax will mean “that foreign investors who buy up property in London to make a profit will finally pay a proper tax contribution to our country.”
In the UK some 55,000 homes are said to be worth more than £2m, seven out of ten of those are in London and just shy of 12,000 are in my own borough of Kensington and Chelsea.
Who owns those homes?  Is it those popular hate-figures – international bankers, oligarchs and corporate raiders – that Mr Balls would have us believe?
Well, no doubt some of them are owned by such people but that is very far from the full story.  Our council tax database only goes back as far as 1999 but it tells us that of the properties that might be caught by the tax – the ones in Council Tax bands G and H – 7,000 of them have been in the same ownership the entire time. And it’s a safe bet that very many of those homes were bought or inherited many years prior to 1999.
Kensington and Chelsea was still a desirable area back in the eighties and nineties of course, but house prices really were remarkably different.  The average price of a semi these days is an unbelievable £4.7 million.  In 1995 it was £505,000.  An average terrace is today valued at £3.3million.  In 1995, it would have cost £423,000.  Back then the merely well off could buy in Kensington and Chelsea, today you need to be one of the super rich.
But what gets forgotten by the advocates of a mansion tax is that there is a large chunk of home owners in our Borough who are by no means “filthy rich” or part of the  global plutocracy..  Many are retired. Several are elderly. Many are on fixed or relatively modest incomes. Increasing numbers live alone. They  purchased their home long ago from post-tax income. What will be the impact of the Mansion Tax on them?  Well if they are living in that average Royal Borough semi, Ed Balls and Vince Cable will be expecting them to find £27,000 a year in mansion tax.  That’s about £50,000 of pre-tax income and there’s no mansion involved – just a lifetime home.
The inevitable result of that can only be that much of our stable older population will be driven from London and from the homes in which they raised their children thereby exacerbating the already skewed demographics of inner London.
And who will be the long-term beneficiaries of such an exodus? Step forward the very people the Lib Dems and Labour claim to have in their sights: those super-rich overseas investors, for whom the mansion tax will be a mere bagatelle.

20 comments:

  1. At last the Leader of a London Council has recognised an important issue for his residents and is speaking out. Well done NIck! More of this please

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  2. Good stuff

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  3. Lets hope that this is only the first of interventions from Cllr Nick Paget-Brown, Leader of Kensington and Chelsea. One speech is not enough or one article on Conservative Home is not enough. He needs to put time and effort into planning a two year campaign of advocacy and events. This is the kind of thing that the Hornton Street PR Department should be masterminding.

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    1. Basements is another area that Nick Paget-Brown should be speaking out on at the National level. Unfortunately Cllr Coleridge is out of his depth. Way out of his depth.

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  4. Yes, I agree with the Dame....a first class piece. Interesting to hear what the feeble LibDem cllrs have to say about this resident punishing tax. When it is finally introduced properties in C. London now out of the net will be well truly caught.

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    1. The Lib Dems are history. Good riddance

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  5. Tired Tory Councillor30 November 2013 at 13:27

    Dear Dame, sorry to say that Cllr Paget-Brown, and all these commentators, are totally misinformed.

    The Mansion Tax in its currently proposed form would NOT tax owners of homes worth £2m at the rate of £20,000pa; in fact a home worth £2m would not be subject to the Mansion Tax at all. The proposal would tax at 1%pa the EXCESS OVER £2m. In other words, if your home is worth £2,225,000 you would be taxed £2,250pa.

    Cllr Paget-Brown needs to get his facts straight. It is a total embarrassment to the Council that he is so publicly pontificating on this issue while quite mistaken.

    I do not personally support the principle of the Mansion Tax, but let's debate this matter on a basis of fact, not fantasy.

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  6. Poor Nick - well intentioned, just gets it wrong.

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    1. Cable has never fully explained how his tax will work.
      Yes, the £2 million flat/house would be exempt, but when the tax is introduced in 3/4 years time the £2million flat/house will have increased in value by at least 15%: it will thus be well within the tax net… as will vast swathes of non prime London.
      A young couple, who have scrimped and save to get a 90% mortgage on a family home in Streatham may very well be having to pay Cable’s tax.
      Paget-Brown made another interesting additional point,
      "it threatens to really kill off the middle here(in RBK&C) if implemented. It also ends the notion of an equitable charge for local services and gets us back to a tax on the proceeds of already taxed income. We were supposed to have left that behind in the 1980s

      A huge number of people in this Borough find themselves in in properties worth between £2.2 million and £4 million: they are not income rich: they are merely victims of politicians who have allowed super rich foreigners to use housing as a means of tucking away(often ill gotten) gains made in their country. The end result is that long term residents of the Borough, with a limited income, yet with an asset valued at say, £2.8 million COULD end up paying £4,000 a year, in addition to council tax of around £1,800 a year. And Paget-Brown is right...off shore buyers will relish the tax. It will be chicken feed for them and allow them to buy, on the cheap, the distressed assets of local people forced by lack of income to sell their much loved homes.

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    2. Property taxes in this country are a mess and the press willingly promulgate lies to defend them. Only recently too many papers happily trumpeted the lie that "property taxes in the UK are amongst the highest in the world", which is a blatant untruth.

      UK property taxes are actually amongst the lowest in the world. Council Tax is it is currently implemented is a massively regressive tax. Council Tax benefit, which is supposed to mitigate this to some extent, has been gutted to such an extent that it can no longer do so. Council Tax was a post-Poll Tax fudge and it shows.

      We don't need Council Tax and a Mansion Tax. We need a properly thought out system of property taxes that don't simply tax those who have the least nearly as much as the millionaire next door.

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  7. I am very concerned to see that 'Tired Tory Councillor' is not too good on basic comprehension. Nick says 'on the value above £2 million'. This is also the same calculation used in his worked example of the effect of the tax on a K&C house.
    I fear that Tired Tory Councillor is in fact, as the name suggests, half asleep, may be more than that. I would go further than that and I suspect that even if he/she is a councillor he/she is not a Tory at all. Dame unmask the somnambulant blogger!

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    1. NPB says 'one per cent charge on the value of a home above £2 million', causing confusion with his choice of words. '1% of the excess value over £2m' would be more accurate. If you read the press on this proposed tax, many people have misunderstood and believe that 1% would be charged on the whole value of residential properties over £2m, rather than just the excess.

      It's still a poorly targeted proposal however, as many have commented.

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  8. The Fact is that "Tired Tory Councillor" is another Pseudo name for a Labour Activists......... Like most the posts on this web site

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    1. Matthew Palmer. Get back in your box. Poor Queensgate residents. They deserve a lot better.

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  9. That green tie. Oh dear me

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  10. Cllr Paget Brown has done nothing to prevent the creation of ever more superhomes, to the detriment of neighbours. The Council repeatedly grovels to the superrich by granting planning permission for whatever abomination is demanded.

    Surely it would be fairer if council tax bands went on up to Z. Those owning £200 million houses can afford it. On the other hand, owners able to prove they inherited or bought now multi million pound homes decades ago, can be granted exemption.

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    1. K&C does not need more income. The Council already taxes and spends too much. In fact there is a strong argument for the Central Govt grant to be cut in half.

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    2. They don't need more income. They just need to get it from someone else.

      The burden of Council Tax however needs to be transferred from those least able to bear to those most able to bear it. The difference in Council Tax between the lowest value and highest value properties is far too small.

      That means: significant Council Tax reform, a permanent rolling revaluation programme, more Council Tax bands, increasing the differentials between the lowest and highest Council Tax bands.

      Has any political party proposed this?

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    3. A proposal to increase the number of Council Tax bands was included in last year's Labour Group budget - but reform of this nature requires primary legislation and cannot be promoted by local authorities alone.

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    4. It does require primary legislation. But then so does the Mansion Tax.

      If NPB is so incensed with the suggestion of a Mansion Tax he should be proposing Council Tax reform as an alternative. Not the status quo which is grossly unfair to the borough's poorest residents, of which there are thousands, and not just a couple of hundred with expensive homes.

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