Labour mansion tax plan 'outdated'

Labour plans for a "mansion tax" on homes worth more than £2 million to boost NHS funding are "outdated" and "unnecessary" as the tax burden on high value properties has increased significantly, a think tank has claimed.

The Centre for Policy Studies said the top 1.6% of households pay 45% of the stamp duty total due to recent reforms, increasing the tax burden on high value homes by £1.1 billion a year.

The think tank said an increase in the rate of the enveloped dwellings tax had also added £100 million a year to the tax paid by high value properties.

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The research found the tax paid on a house sold in south-west London for £2.5 million has increased by 405% since 2009.

The findings will be pounced on by critics of Labour's plan inside and outside the party, but supporters will argue that the mansion tax is not comparable to stamp duty as it is an annual levy rather than a one-off tax paid when a home is sold.

Tim Knox, director of the Centre for Policy Studies, said: "For economic recovery, the UK does not need new taxes targeted at the aspirational, the successful and sometimes the fortunate.

"Rather, it needs lower, simpler taxes which encourage innovation and productivity and which stimulate, not penalise, wealth creation."

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Lucian Cook, director of research at Savills estate agents, said: "The recent reforms of property taxation are raising as much from high value properties as any mansion tax.

"If, in addition to these reforms, a mansion tax were introduced after the next election, it would add a layer of complexity and unfairness into the tax system for residential property.

"On top of that, the economic impact of a mansion tax is impossible to quantify but would clearly be damaging, not least in seriously undermining the attraction of the UK (and London in particular) to overseas investors."

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