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Clegg drops 'mansion tax' for homes worth £1m
Nicholas Cecil, Chief Political Correspondent30.11.09
Nick Clegg's economic policy came under fire today after he scrapped his "mansion tax" on properties worth more than £1million.
The Liberal Democrat leader was left fighting to defend his wider tax plans after the U-turn on the property levy.
Party chiefs agreed to the climbdown, which is a blow to Treasury spokesman Vince Cable's reputation, amid fears of an electoral backlash in marginal seats in London.
The Lib-Dems are instead proposing a one per cent tax on homes worth more than £2million instead of 0.5 per cent for those above £1million.
The move put Mr Clegg on the backfoot and he immediately faced questions on the fiscal plans which will be the centre of his party's election manifesto.
Housing experts accused him of overestimating the number of homes worth more than £2million, although he insisted: "We are very, very confident that the figures are wholly credible."
The Lib-Dem leader was also challenged over whether he was being "deceitful" by promising millions of voters lower taxes when the public finances were in such dire straits.
He has spoken of the need for "savage" public spending cuts and many experts believe taxes will have to rise.
Treasury minister Sarah McCarthy-Fry said: "Their mansion tax muddle is typical of the Lib Dems. The only thing that is consistent is their sums don't add up."
Mr Clegg will escape the £2million levy, but would have been caught by the earlier plans. His property in south-west London is worth about £1.1million.
The Lib-Dems say there are up to 35,000 homes worth more than £2million in London, and about 70,000 to 80,000 across the country. But housing website Mouseprice.com put the figure nationwide at just under 20,000.
Mr Clegg said his party had "homework" to do on the tax after Mr Cable announced it at the party's autumn rally.
The levy is intended to raise £1.7billion which would go to raising the income tax threshold to £10,000.
Twickenham MP Mr Cable was hit with a revolt after failing to fully consult colleagues on his reforms.
Reader views (18)
So they will lower I tax for the lower paid?
That will soon be recovered by the increases they will put on other taxes and of course their 'Green Taxes'.
Voter beware?
- Peter C., rainham essex.
The reason that the ever chaotic LibDems have abandoned this foolish policy is simple; it would have lost them the Parliamentary seats that they hold in Richmond and other parts of South West London.
People there who bought fairly ordinary family homes for 50 to 80 thousand or so in the early 1980s now find them worth over that magic million mark. Those people are not cash rich and so not easily able to pay the LD's proposed envy tax, but they have been voting for the LimpDumbs and would undoubtedly not do so in 2010 if this stupidity was still their party policy.
A bad idea killed for the wrong reasons; typical lefties then.
- Matthew, London, UK
Usual lame ideas from an un -electable party. They stand for everything and represent nothing.
- Vini, London
Why should there be only 8 council tax bands .This is ludicrous and totally unfair.Why should a person living in a castle be only paying marginally more than Joe Public?
- Lesley, Northumberland
Why pay any attention to what this guy thinks or promises ? He is never going to be in a position to do anything.
- Michael, London, UK
Clegg and hs party may have got into a muddle, but it little behoves a Treasury Minister in this benighted administration to make capital out of it. New Labour has plenty of its own muddle and mess to clear up and Ministers would be well advised to concentrate on that.
- James Elliott, Eastbourne UK
badly thought through policy. There is and has been a fundamental principle in the UK, that you tax income - whether it be interest, rent, profit or salary etc and you don't tax people's primary residence. This breaks that trust.....I believe in fair and progressive taxation but this is just badly thought through and based on trying to be popular.....it is tax based on envy and that is a dnagerous road for the Lib Dems to go down....
- Martin_Clerkenwell, london
Dr Cable should make sure Mr Zach Goldsmith who benefits from a £7 million Richmond Park property held in trust in the Cayman Islands, would also have to pay? Goldsmith the non-domicile and what other events will now come out?
- Andrew, Notting Hill, London
We all know the real reason they changed their mind on this tax.
Chris Hune has 7 houses - but no doubt doesn't want to pay this tax. Isn't it convenient that someone with 7 medium value houses gets off, whilst people with one expensive house have to pay up!
Why exactly should someone with a £2m house with a £1.7m mortgage (so £300k equity in their home) pay more tax than someone with a £500k house with a £200k mortgage (also with £200k equity in their home)?
I liked the Lib Dems when they were led by Charles Kennedy. A local income tax was a fair idea. Taxing assets rather than income is stupid, which is why everyone hates council tax.
- Kate, Harrow, London, UK
The trouble with new taxes is that is does not take long for politicians to 'adjust' the price levels at which they are charged. The exact same thing happened with Stamp Duty which rose from 0.5% to 4%. If this sort of tax is passed it won't be long before tax creep hits us all and London will be hurt the most. The Lib Dems just lost my vote.
- Charles, London
The Liberal party can say what they want knowing fine well it will never amount to anything. Next policy, enforcing peace in the middle east, banning global warming and asking the public not to commit crime.
- Hansel, London
In answer to MW - the Land Registry holds all that information, and would/should be alert to fraud.
And of course you don't get a refund if you sell your house under the £2million band. Thats like saying you should get a rebate on all the Income Tax you have paid if you lose or quit your job.
- Nick, London
Nick Clegg lives on my street and guess roughly what he paid for his house.....yep £1m! Usual socialist rubbish, soak the rich! Despite the fact that they have paid income tax, NI, stamp duty before buying those houses and council tax based on their value already.
- Mark, London
This is a period of time when everyone can promise everything, and anything, to everyone; knowing that once this pre-election period is over next year; they can default as usual; this is called conning the public, that are always Conn-able.
Nick Griffin has more chance of being elected than Nick Clegg has.
- Mickinlondon, london
"Ms Kramer faces a challenge for her seat from Tory candidate Zac Goldsmith. "
How exactly is Zac Goldsmith allowed to stand for Parliament when he's registered as a non-dom, surely as someone who doesn't live in this country he couldn't possibly do the job?
- Bob, Cheam
What would have happened if a person had 2 or 3 homes totalling more than the £1 Million, but someone lived in a house worth £1 Million that had lived in it for years?
Wouldn't that be grossly unfair.
Usual silly idea from the Lib Dems.
- P Staker, London
Who gets to decide how much a property is worth? It is totally subjective and therefore impossible to apply in the real world. In areas where houses are worth over £2m, each house stands on its own valuation.
What if I was forced to pay for ten years and when I came to sell the house was only worth £1.9m. Would I get a refund?
Do these people ever think before they come up with these ridiculous policies?
- Mw, London, UK
No he DIDN'T "tear up" his party's policy on tax. He has changed the policy, but it still remains, and it is a very good one, with at least 69% support from the public, according to polls. Furthermore, it is much better than Cameron's tax cuts for the rich and Labour's failure to create incentives for low paid people to work.
Bravo, Nick Clegg! I hope you hold the balance of power at the next election and are able to force the two big parties to stop pandering to their respective special interest groups - benefit claimants and big labour, and tax dodging fat cats and big business.
- Robert C, London UK
