Miliband mansion tax to meet benefit bill
Labour Party leadership candidate David Miliband has suggested a ‘mansion tax’ on homes worth more than £2 million should be introduced to fund housing benefit costs.
In a newspaper interview Mr Miliband said the levy would raise £1.7 billion that could be used to reverse housing benefit cuts proposed by the coalition government.
Business secretary Vince Cable put forward the idea of a mansion tax in the Liberal Democrat general election manifesto, when he was the party’s Treasury spokesman, but it was lost during negotiations with the Conservatives.
The plan would mean the owner of a home worth £3 million would pay at least £10,000 extra a year. In London around 34,000 homes would be liable for the 1 per cent tax.
In the Budget the government introduced a range of proposals that chancellor George Osborne said would reduce the housing benefit bill by £1.8 billion a year by the end of the current Parliament.
Critics of the proposals, which include imposing an upper limit on rents of between £250 and £400 a week, would hit Londoners hardest and drive benefit recipients from some areas of the capital.
The National Housing Federation has calculated the measures would leave around 936,000 people at risk of being driven into debt, falling into arrears, or losing their homes, with a ‘high proportion’ ending up homeless.
Mr Miliband said: ‘We’ve calculated that a mansion tax of 1 per cent on homes of more than £2 million would more than cover the money that they claim to be saving from housing benefit reforms.’
Four London boroughs, Kensington, Westminster, Hammersmith & Fulham and Camden would pay 60 per cent of the total. Property website Zoopla has calculated that the levy would cost wealthy homeowners an average of £12,270 a year.
Inside Housing is running a campaign calling for a fairer way to cut the housing benefit bill. Visit our What’s the Benefit? page for more information or sign our petition to support the campaign.
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Readers' comments (12)
Chris | 03/08/2010 10:35 am
Miliband's proposal would be just meddling around the edges of the issue, offering a temporary short-term fix for the symptom of a problem without dealing with the root cause. If this is an example of his thinking, and why not, it has been the method of government for over 30 years now, then his tenure at the top will be hopefully short lived if it arrives.
If rents are too high and wages to low then these two factors must be addressed if benefits are to ever be truly contained. The right's approach of ignore the problem and suffer the victims is indefensible, but the mansion tax idea is just as wrong. Finding new ways to fund benefits whilst accepting that employers can further reduce wages to drive up shareholder profits is not beneficial to the treasury. A sustainable tax structure, with fair wages and rent controls, will address the problem in a way that is neither short term not short-sighted.
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Anonymous | 03/08/2010 10:45 am
Typical response, he doesnt know how to sort the mess out so lets just tax the rich a bit more and use that money to cover up the problem. As the first poster said, if thats his idea of how to sort the shortfall out, he wont last long and nor will this Country.
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Anonymous | 03/08/2010 11:01 am
Yesterday, it was saving the British pub.
Before that saving the British banger, or was it banana.
No matter. You can't take the wonk out of the wonker.
And slapping a mansion tax on the punters will never pass the Daily Mail test which means our David will never get a chance to do anything at all.
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Alpha One | 03/08/2010 11:16 am
Has he learnt nothing from the 50% tax debacle, the tax that will famously cost more to administer than it will collect in!
If you tax people with money, you are always on to a losing streak, as they are the ones with the money to find a way around paying those taxes.
imbecile!
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Chris Cook | 03/08/2010 12:50 pm
@ Alpha One
The Mansion Tax is not the way to tax it, but while money can move, land can't.
Tell me why it's so difficult to tax land rental value? It's not going to go off-shore is it?
If you can think of a way of avoiding it, you can name your own price as an adviser.
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Sidney Webb | 03/08/2010 1:25 pm
Chris - You create an offshore trust to own the land, paying a dividend into an offshore account. Whilst you will pay local rates, your tax liability will be less the dividend paid, which can be in effect a zero liability. Your personal income liability will also be zero. If you were really clever you could arrange to qualify for grant aid for not farming the land etc. - I don't think this nugget will earn me much though!
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Anonymous | 03/08/2010 3:11 pm
He just doesn't get it.
Stop making people who create jobs and live in big houses Pay for those to idle to take care of themselves. We are no longer living the socialist nightmare.
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Anonymous | 03/08/2010 7:03 pm
I totally agree with Dave Miliband. Id rather vote for him and have him as leader than a coalition who wants people who work for a living to leave social housing in the future, creating more sink estates and making people who are working pay extortionate rents to line greedy private landlords pockets. There should be affordable housing to all,it should be a choice regardless of income. Private renting prices are not in accordance with most menial wages . Where do they want people with menial jobs to live on the streets!!!
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| 03/08/2010 11:39 pm
Many of these £2m mansions are owned by international capital, Arabs, Russian, dodgy third world rulers who have bleed their countries aid money dry and stashed in Swiss bank accounts etc. I wonder actually how many British people would be affected out of the total. London mansions are a mecca for the international mega-rich, many of whom acquired their fortunes by dubious means. I can't see them selling up and moving somewhere else for a poxy £12K a year. Although it goes against my libertarian instincts, the desire to fleece some wealthy foreign types wins the day. Milliband could be on to a winner here...
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Sidney Webb | 04/08/2010 10:36 am
Stop - think spin - think through - then react.
Any gain will be short lived, once accountants etc exploit the loopholes (which strangely always seem to exist).
Finding a new way to fund a problem does not solve the cause.
There are a range of vested interests (sponsors' profits, populace control through economic shortage) which prevent modern governments from addressing the problem.
All of which adds up to this not being a reason to support an individual who is simply promising to keep things as they are.
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