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Politics Amp Policy
Balls says mansion tax is top priority
From the Financial Times of Tue, 23 Dec 2014 13:15:37 GMT
Shadow chancellor Ed Balls responds to Chancellor of the Exchequer George Osborne following the Autumn Statement to MPs in the House of Commons, London. PRESS ASSOCIATION Photo. Picture date: Wednesday December 3, 2014. See PA story POLITICS Main. Photo credit should read: PA Wire©PA

A Labour government would introduce a mansion tax in its first budget after the general election, with owners of homes worth more than £2m starting to pay the levy in 2015-16, Ed Balls has confirmed.

The shadow chancellor said the levy would be one of the first priorities of a Labour administration. Estate agents and some politicians have criticised the proposal, saying it affects central London property disproportionately. They also say it would hurt less wealthy homeowners who bought flats decades ago at relatively modest prices.

Treasury officials were already working with Labour to hone the fine details of the proposals, Mr Balls said in an interview with the Independent newspaper.

New taxes on foreign homeowners and the threat of a mansion tax have already led to a slowdown in the luxury end of the London housing market, according to estate agents.

The Liberal Democrats were the first big party to promise an annual tax on owners of more expensive properties. Labour has followed suit, vowing to spend the extra money on the National Health Service.

Ed Miliband, the party leader, said at Labour’s annual conference that he would earmark an extra £2.5bn for the health service. About £1.2bn of that would come from the mansion tax with the rest from a crackdown on tax avoidance and a new cigarette levy.

“Saving the NHS will be at the heart of our first budget,” Mr Balls said. “I would like to see that revenue coming in the first year of a Labour government, before the end of the financial year.”

The comments are an attempt by the shadow chancellor to rebut the idea that it could take time to legislate for a new property tax. The Labour government of 1997 was able to introduce its £5bn windfall tax on privatised utilities within seven months of the general election, he pointed out.

George Osborne, the chancellor, used his autumn statement this month to announce a shake-up of the stamp duty regime, with buyers of the most expensive homes paying much more than before.

In the wake of Mr Osborne’s announcement some Tory strategists thought that Labour and the Lib Dems might reconsider their commitment to a mansion tax. Instead both parties immediately reiterated that they would keep the policy on top of the new, more onerous stamp duty system.

The Labour tax would have to average £11,000 a year to raise the £1.2bn target figure, according to the Financial Times’s calculations. Mr Balls has promised that those with homes worth between £2m and £3m would only pay about £3,000 a year.

The shadow chancellor has been vague about what that means in terms of typical payments for those with homes in the £3m-plus bracket: basic maths suggests it would be much higher than £11,000 a year.

The party has promised that there will be provisions to help those who are asset-rich but cash-poor, for example pensioners in large homes in London. They will be given the right to defer the tax until the property is sold or they die.

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