Rather than benefit the working majority, a mansion tax could, in fact, do the opposite, says Tony Hennessey…
Imagine for a moment that it is June 2015.
The Chancellor of the Exchequer, Ed Balls, is sitting at his desk in the Treasury, reflecting on all that has happened in the tumultuous six weeks since Labour took office.
Mr Balls has decided in his first Budget to introduce a mansion tax, a prominent feature in the Labour Party manifesto. It might raise £1 billion, possibly a little more; hardly a substantial contribution to the Exchequer. It would, however, play well with his constituency and others like it, where very few houses were likely to be worth anything like the £2 million starting point for the new tax to bite. It would be a blatantly redistributive impost and be a bold political statement. After all, it is hard to hide valuable bricks and mortar in an offshore bank account.
Now, cast your mind back to last year. In 2012 George Osborne, the current Chancellor of the Exchequer, raised the rate of stamp duty land tax (‘SDLT’) to 15% on transactions where residential property was acquired by a “non-natural person” (companies and certain other entities) and where the consideration exceeded £2million. Mr Osborne followed this up in 2013 with the