By, Trevor Abrahmsohn, Glentree International
You’d think that the Prime Minister and Chancellor would be ‘punch drunk’ from the ‘kicking’ they are getting from the electorate and would try to conjure a slightly more appetising dish in the forthcoming autumn Budget, than Mansion Tax (MT).
No, not these two ‘numb nuts’, instead, by all accounts, they are planning to impose a MT, which will greatly disadvantage some and irritate others, so that doubling down on the incompetence of these two ‘goons’, is carrying on apace.
Why would MT be disadvantageous?
It will raise, at best, a paltry £2billion which is 0.2% of the total tax revenue and only 6.6% of the ‘Budget deficit hole’ the Chancellor needs to fill, but emotionally, a great deal more than this as an irritation factor. It most definitely pays homage to the ‘class war warriors’ that are in the ascendancy in her party.
It is a punitive, pernicious tax which has long been cherished by the left-wing zealots and it will cause mayhem and huge disruption to the housing sector which, after all, makes up 5% of the GDP of the UK and a significant driver of consumer spending.
If MT is accompanied by the abandoning of stamp duty (SDLT), this will trigger an avalanche of sales after the Budget which will be a bonanza for homeowners, until they realise that the ongoing MT liability will hit them in their pockets, as it is a post-tax cost. For instance, a 1% levy would therefore represent, probably 1.8% (if you are a higher taxpayer), so on a £2million property the pre-tax cost of a 1% MT, in cash terms, will equal £36,000 in cold blood. Not an inconsiderable sum.
If MT is ‘slab sided’ and starts at, say, £2million of value, the owner of a home at £2.1million will be paying a tax of £38,000pa; however, an owner of a property of £1.999million will pay nothing. Good luck with the conflict arising from this disparity.
Currently, the UK has the highest property taxes in the world, when you include, stamp duty, council tax, capital gains tax on second homes. The trick is, don’t make it worse!
The UK has lost about 16,500 millionaires as a result of the daft non-dom tax changes and if there is anyone left, MT will certainly galvanise their hurried exit. The cost to the UK economy will be incalculable.
MT could freeze the uber residential market and this ‘constipation’ will percolate down to the other price ranges and before you look around, you will have gridlock.
MT will penalise London homeowners and deepen the North/South divide and create economic sclerosis.
‘Trying to make the rich poor will never make the poor rich’
London was always seen as a safe home for global capital, and it is now becoming toxic to the wealth creators who are fleeing to kinder fiscal climes such as Dubai, Switzerland, Monaco, Italy, and Portugal.
Hiring ‘Eddie the Eagle’ to teach your child ski-jumping
A very worrying sign is that the Treasury has recruited Mr Torsten Bell to help prepare the Budget this autumn. If you remember, he was responsible for the Mansion Tax proposals, as the director of policy in Ed Miliband’s foolhardy attempt to win the May 2015 Election. This must have contributed to David Cameron’s win at that time. It must be the equivalent of hiring ‘Eddie the Eagle’ to teach your child ski-jumping.
Council tax bands should be extended
Instead (and not as well as), the council tax bands should be extended, and I predict that this will be understood and accepted by the payees, if the levels are sensible.
‘Punishing the worker and rewarding the shirker’
I am aware that the estate agency industry (amongst others) is laying off people with gay abandon, partly as a result of the NI impositions of the last Budget and maybe a message needs to be passed to ‘Rachel from Accounts’ that ‘punishing the worker and rewarding the shirker’ is an unmeritorious pursuit and not one appreciated by the electorate.
‘None so stupid as those who don’t want to learn’
You would think that the lessons learned from the drubbing that the Labour Party received from the Caerphilly By-Election recently, (which hitherto was an 100-year-old stronghold for them), would be sufficient to get the Prime Minister to ‘wake up and smell the coffee’. Sadly, I fear that we are in the territory of ‘none so stupid as those who don’t want to learn’.