You can tell, can’t you, that Mr. Balls has had his ears ‘chewed off’ by the anxious Labour MPs in the south, particularly in London (Tessa Jowell and Glenda Jackson), by the fearsome backlash from the Mansion Tax proposals that is now the main plank of their manifesto policies.
Having ‘stolen’ another policy from the Lib Dems, in the absence of any other more worthy and imaginative proposal, they are now back-tracking in order to prevent potential Labour supporters in London ‘biting them on the butt’. Do you sense a wafting of the reflux caused by the dropping of the 10p tax rate by Mr. ‘Inglorious’ Brown?
They now seem to be designing policy ‘on the hoof’ and this is a conspicuous reaction from the devastating effects of this punitive and vindictive, class war-inspired tax.
Mr. Balls is trying to allay the fears of the majority of ‘Mansion Tax candidates’ by suggesting that the tax between £ 2/3M will be just 0.3%. Based on this rate, the government will only raise a maximum of £ 300M which would be a ‘drop in the ocean’ as far as saving the NHS is concerned, given that the latter consumes annually over £100Billion. For instance, it wouldn’t pay for a change in the logo, let alone provide one more operation.
Poor ‘granny’ and her frail widow income, is going to get a respite from this tax allowing it to be rolled over (with interest) until the property is sold or upon her death. What an inspired solution …. I don’t think. ‘Granny’ will be terrified to ever sell the property for fear of triggering this tax and the money that she intended to bequeath to her family, upon her death, will be all but extinguished by the aggregate of Death Duties and accumulated Mansion Tax. I am not sure whether robbing ‘grannies’ is something that the Labour Party should aspire to.
Foreigners already pay a huge maintenance tax if they buy properties through offshore companies via ‘Annual Residential Property Tax’ (ARPT) which could be up to £140,000 pa. How is Mr. Balls going to tax these entities any further than this without making London property a toxic investment for International buyers? Will anyone out there see this for what it is ….. visceral, crass, populism?
Mr. Balls and his ‘Merry Men’ do not care whether they raise a farthing from this tax proposal since if it earns them votes it has fulfilled its objective. M. Hollande, in France, used the same cunning device with his 75% Wealth Tax (which incidentally was never instigated). It had the effect of causing an exodus of wealth creators from France and these are the very people who invest and create jobs for the nation.
Even the Liberals have decided to moderate their Mansion Tax ambitions by extending Council Tax Bands, but since Mr. Balls has dug himself so deep into this problem, he doesn’t know when to stop digging.
Already, the spectre of Mansion Tax is having a dampening effect on sentiments to the extent that prices are flat lining and there is a recession in parts of London which is affecting the liquidity and, for that matter, Stamp Duty receipts due to fewer transactions.
With so much at stake, potential Mansion Tax payees will find any legitimate way to circumnavigate this tax. There will be queues in the Courts and Tribunals, particularly with homeowners whose properties are around the threshold of the bands.
Imaginative accountants will be sharpening their pencils trying to find loopholes such as creating conference rooms, bed and breakfast facilities in the home and sub-dividing the properties. Nobody will want to spend money on their properties for fear of this liability and as such, this will affect retail spending and the purchase of brown and white goods, to say nothing of the effect on the building industry.
All this puts at risk the precious recovery that at the moment is the highest in the G7 countries.
The two ‘Eds’ were the joint architects of the horrendous and discredited previous New Labour regime, which resulted in our having a budget deficit which at £160 Billion was one of the highest in the world and was competing with the likes of Greece.
Why on earth would we want to put the recovery at risk and allow these politicians to do this in order to gain votes?
They are stoking up a class war that is a travesty of justice. Haven’t we suffered enough with their political and economic incompetence and do we need a basinful more of their offerings? Answers on a postcard, please ….