Tuesday, 19 February 2013

A Mansion Tax is fairer than Income Tax


February 18th 2013

Ed Miliband is right to look at shifting tax off incomes and on to unearned income by paying for the reintroduction of a 10p tax rate through a fairer property tax on high value homes. A home has two elements that make up its value – the building and the land it is located on. The land value is created by the whole of society not by any property owner and it is unfair that as land values rise because of public and private investments – paid for by us all as tax payers and as consumers - it is only owners of land that receive a financial windfall whereas tenants and other non property owners get nothing.

The Labour Land Campaign reminds people that the “asset rich, income poor widow“ being trundled out by some objecting to Ed Miliband’s proposal applies only to a very small group of people, and there are ways of getting around the problem, such as letting them roll up the tax payments until they dispose of the property. “Asset rich income poor” people have to pay for their gas, electricity, council tax etc today, why should those who can afford to upkeep a £2 million or more property be subsidised by those who live in modest homes, a large proportion of whom are tenants or living with family or friends.

Heather Wetzel, Chair of the Labour Land Campaign, says “Ed Miliband could do even better by reforming all property taxes and abolish business rates and council tax and replace them with an annual Land Value Tax being applied to all land according to its optimum permitted use. Such a tax would result in those homes, commercial buildings and idle development sites being used to provide more affordable homes and business premises instead of being held out of use by land speculators.

Land investors do not invest in anything; they actually speculate that land values will increase providing them with an unearned income that has been created by the whole of society. When tax payers from across the UK paid for the London Underground’s Jubilee line extension, it has been estimated that the extension cost £3.5 billion to build and land values rose by over £13 billion around the new stations because of the economic benefit the extension brought to those areas. Tax payers paid but land owners received a huge windfall that should have been collected and reinvested in public services throughout the country.”

If the London to Birmingham/Manchester and Leeds high speed railway (HS2) were funded in the same way then many local rail improvements including CrossRail 2 (Hackney to Chelsea) could be sustainably funded.

For more details contact Steven Clarke at steven.clarke@labourland.org, or visit www.labourland.org.

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