A key (and much trailed) feature of the Chancellor’s budget today was the introduction of higher stamp duty rates for properties worth more than £2 million. Let’s call it ‘mansion tax lite’. The coalition will also be clamping down on stamp duty avoidance, raising stamp duty even higher for foreign owners of high value homes, and consulting on an annual tax of 15% for certain ‘non-natural persons’ buying mansions. (Non-natural persons is a bit of a funny phrase, but in short the government has wealthy foreign owners and offshore companies in its sights).
The revival of the mansion tax debate over the past few weeks took me back to autumn 2009 when then Lib Dem Shadow Chancellor Vince Cable announced the policy at their party conference in Bournemouth. Hoping to win over Labour voters, Cable posed a neat contrast to Osborne’s 2007 pledge to scrap inheritance tax for properties worth less than £1m. However, it may have also been Nick Clegg’s very un-rose garden-like attacks on Cameron around the same time that put space between the Lib Dems and Conservatives in the public mind.
Two and a half years on, the Lib Dems will once again be hoping that talk of property tax will help to appeal to voters. But the landscape has changed and property taxation is now a) slightly more politically palatable and b) increasingly an issue for all political parties, saved from the deep trenches of techie housing policy debate. My twitter feed is full of think tanks and commentators talking about the ins and outs of stamp duty – why it may not make a huge difference, and why it will be the ruin of us all! Political parties of all shades may find themselves competing on property taxation – leading to some awkward conversations and home truths about who pays and what the effects of property taxes are.
Interested to know more? Our Rethinking housing taxation policy discussion paper is a great starting point.