On 24 February the Deputy Prime Minister said:
“Victor Hugo observed that it is near impossible to resist an idea once its time is come…He was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen.”
We all know that when he is determined to get these things through, he is a very persuasive individual.
In clause 97—on page 57 at about line 27, for those who are interested—there is a table of the amount chargeable under the mansion tax for homes owned by companies, which is, in essence, what the Government are proposing. For properties worth between £2 million and £5 million, the annual chargeable amount would be £15,000 a year; for those worth between £5 million and £10 million, it would be £35,000; for those worth between £10 million and £20 million, it would be £70,000; and for those worth more than £20 million, it would be £140,000. That is the Government’s half-hearted attempt at a mansion tax. Thankfully, we have it in black and white—well, black and green—in this Bill. We tabled the new clause because we would like to see equivalent detail on how a mansion tax would work on a range of different widths of the 10p tax rate band, and then we can make a judgment about what change it is reasonable and prudent to implement.
My hon. Friends are right to start to focus on the other part of the pantomime horse. I am sure that the Liberal Democrats are sometimes in the lead on these issues in the coalition. They are in a very precarious position on the mansion tax. Having advocated it for so long, they have consistently found ways and means to vote against it whenever it has been presented to the House. I do not know whether the Liberal Democrat present in the Chamber, the hon. Member for Eastleigh (Mike Thornton), wants to say how he is going to vote today, but I live in hope. In a spirit of cross-party consensus, I hope that he will agree with his noble Friend Lord Ashdown, who warned those in his party before the last time they changed their minds on this issue that it would be “weird” for fellow Liberal Democrats to vote against such things. The Business Secretary said:
“It depends entirely on how they phrase it. If it is purely a statement of support for the principle of the mansion tax I’m sure my colleagues would want to support it.”
That was like the version of the amendment that we tabled previously. We did not get very far with it on that occasion, so this time we have tried a proposal that explicitly talks about passing on the revenue to those who need it most of all through the 10p rate of income tax.
The proposal has not been plucked from the air. Other jurisdictions have equivalent property charges at certain levels. I gather that in New York City, which is hardly a bastion of socialism, owners of properties worth more than $3 million—roughly £2 million—can find that they need to pay the equivalent of £22,000 a year under their form of mansion tax. The Treasury’s own documents have blown apart the argument that the Exchequer Secretary used to deploy, which was “This stuff isn’t workable; it would mean mass revaluations of council tax.” All those things have been pushed to one side as the Government propose their brand new tax—the annual tax on enveloped dwellings. That is clear as the light of day. It has four bands, which suggests that it is entirely feasible.
The documentation on ATED states:
“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax.”
We can all go along with that. The document continues:
“The interest to which the charge will apply will be the freehold or leasehold interest”.
So far, so good. It also notes that the annual charge will be applied separately to the freehold and the leasehold and that the value of the property interest
“which will be relevant for the annual charge”
will be its value on 1 April 2012.
6.30 pm
The document explains how the Government’s new mansion tax could work:
“Property valuations for the annual charge will be self-assessed by the persons liable to the charge and submitted to HMRC as part of their annual charge tax return. HMRC will have powers to enquire into returns and also to make assessments so that non-compliance can be effectively challenged”.
It goes on:
“Properties will be re-valued every five years”.
If that applies to £2 million properties in a company-corporate wrapper—the enveloped arrangement—perhaps it could provide the basis of a broader application of a mansion tax.
The document goes on to say:
“To assist taxpayers in compiling their annual charge tax return HMRC and the VOA”—
the Valuation Office Agency—
“will offer a pre-return valuation checking service to property owners.”
It sounds as though the Treasury is gearing up towards a mansion tax. The Government’s approach to ATED suggests that the question about whether a mansion tax is feasible and can be delivered has been answered not only by Liberal Democrat and Labour Members, but by the Exchequer Secretary himself.