Labour’s mansion tax is “unnecessarily complicated” and imply £16,000 charge on properties over £3m, says IFS
Both Labour and Conservative plans for the taxation of property have come under fire from the Institute for Fiscal Studies (IFS) with Labour's controversial mansion tax being described as "unnecessarily complicated."
The IFS says there is host of problems with the way property is currently taxed, not least the structure of council tax.
The independent think tank described the system, which is based on relative values of properties in 1991 in England and Scotland, as "ludicrous" and "regressive."
Instead of the complications of setting up a whole new mansion tax, the IFS say a reform to council would hike the bills for expensive houses "while ironing out anomalies in the taxation system."
No one knows exactly how many houses are worth over £2m and, therefore, liable to Labour's mansion tax but the IFS put the figure in the region of 100-150,000.
Ed Miliband wants to impose a tax of £3,000 on houses worth £2-3m. Those over £3m would be subject to a heftier fee. Labour says it can raise £1.2bn from the policy but this form of policy-making is not the IFS's liking:
Setting a revenue target is not a sensible way to make policy: it is not clear that the appropriate tax rate on high value properties should be higher if there turn out to be fewer of them than expected, or vice versa.
The IFS also gives some clue as to how much owners of houses worth more than £3m could be hit, citing Treasury figures.
Assuming there were 150,000 properties eligible for the tax, some £285m would be raised from houses worth £2-3m.
The remaining 55,000 properties were valued above the £3m mark would then be hit with a charge of £16,600.
The respected economic think tank gives a damning final verdict on the three main parties' plans for property tax:
There are problems with the structure of council tax. Neither the Conservatives, Labour nor the Liberal Democrats looks like addressing them. The mansion tax would not solve those problems.