A Mansion Tax to be introduced by a future Labour government would be a flop according to leading experts.
In his speech to delegates at the Labour Party conference in Manchester Tuesday, Labour leader Ed Miliband committed a future Labour Government to introducing a “Mansion Tax”.
The tax would hit owners of properties worth over £2m, and according to Savills, one the UK’s top estate agents, the tax would disproportionately hit London and disrupt the property market.
Susan Emmett of property agents Savills has said that around 80% of all properties that would attract the tax levy would be in London. She intimated that Labour is being over optimistic in the amount of revenue the tax would bring in as it would have an impact on other property taxes.
These sentiments are echoed by Jeremy Warner, associate editor, writing in the Daily Telegraph Tuesday when he said, commenting on the plan to bring back the 50% rate of income tax, coupled with a “Mansion Tax”, that:
“Neither will raise much, if any, extra money, and by putting a damper on economic activity, may even end up revenue negative.
“Already the top 1 pc of taxpayers contributes 30pc of all income tax, and the top 10pc of taxpayers 30pc of all taxes. The idea that these groups can be taxed even more without hitting the law of diminishing returns is for the birds. It’s been tried in France, and self evidently doesn’t work”
Savills’ Ms Emmett has said that UK properties that are worth over £2m are already contributing a large amount of tax revenue for the Treasury being in the 7% rate of stamp duty band.