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Labour Proposing 0.5% Annual Property Wealth Tax If Elected To Power

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http://www.theguardian.com/politics/2015/dec/07/labour-must-find-new-ways-to-tackle-inequality-says-tristram-hunt

Making the case for a property wealth tax to replace the existing regressive council tax, Hunt pointed out that 14 OECD countries – including the US – raise a recurring tax on the value of residential property. An annual 0.5% tax upon the value of each property – less than most countries – would completely cover the cost of replacing the council tax, he said.

The tax would be raised on owners not occupiers, taking “generation rent” completely out of local taxes altogether.

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Of course it would start at 0.5%...

However, as one votes from one's back pocket, I might even vote for them if this is in the 2020 manifesto!

Edited by Killer Bunny

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0.5% would be a lot cheaper than existing council tax.....

Living in London....0.5% would probably almost if not double or exceed existing council tax.....

.

Edited by winkie

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Not sure why its "less regressive" per se.

Why not simply increase the current bands?

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Not sure why its "less regressive" per se.

Why not simply increase the current bands?

The bands were created well before the existing London property boom.......

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My maths put this at £500, per £100,000 a year.

It would certainly hit London hard. However this assumes that house prices are linked to income, they aren't. My own house is now out of price bracket.

There is no need for a tax like this what they should do is have a local income tax. As this would certainly put the burden on the rich we have this nonsense of linking property values to taxation.

Edited by interestrateripoff

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The leading Labour moderate Tristram Hunt moved to reclaim the issue of inequality for his wing of the Labour party, calling for a property wealth tax, universal free childcare, reversal of cuts to inheritance tax

1. Property tax and more inheritance tax (most likely on property)

2. Free childcare so both parents are working to use two incomes to pay more for houses and push the prices up, which results in people paying more tax in step 1.

Plus of course as both parents are working they both pay income tax. If houses were cheaper women could choose to work for more disposable income instead of second incomes largely servicing joint mortgages debt. Free childcare is a banker's benefit.

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There is no need for a tax like this what they should do is have a local income tax. As this would certainly put the burden on the rich we have this nonsense of linking property values to taxation.

Absolutely - if there is one thing we should be taxing it is work. People enjoy it and should pay for the privilege. Way better that than taxing the idle rich and landowners for sitting on their arses doing nothing.

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Absolutely - if there is one thing we should be taxing it is work. People enjoy it and should pay for the privilege. Way better that than taxing the idle rich and landowners for sitting on their arses doing nothing.

+1. How dare the overworked high earning renters have some money left over! They should be paying more income tax (and NI) so that rich speculators and boomers can keep getting 10% more unearned wealth on their houses. Also, this will encourage people to work harder, as climbing the career ladder in order to pay more income tax is most peoples life dream :wacko:.

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Absolutely - if there is one thing we should be taxing it is work. People enjoy it and should pay for the privilege. Way better that than taxing the idle rich and landowners for sitting on their arses doing nothing.

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My maths put this at £500, per £100,000 a year.

It would certainly hit London hard. However this assumes that house prices are linked to income, they aren't.

It's not a % of income but of price of property.

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Good stuff. Like millibands proposed abolishment of that absurd tax dodge for rich foreigners (forgotten it's name) that Osborne then borrowed because it held so much political capital, and also the green party's (I think) proposed changes to BTL taxes, also adopted by Osborne, let's hope it makes it into law whether labour win or not at the next ge.

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I can see it now .... all those poor pensioners trapped in their two million pound London terraced houses having to stump up £10,000a year .... far more than they paid for the whole house .... I am sat here crying at the thought of it. Westminster has one of the lowest council tax rates in the country.

+1

Takes a radical left winger to remind us what progressive tax actually means

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I like the idea. As long as it is implemented so that only landlords can pay it directly. I.e. how flats' service charges are normally paid, not how council tax is normally paid.

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They stole my idea!

I expect it will get about as far as labours mansion tax proposals did.

Even if it benefits most people, British voters seem to lose sense when the words 'property' and 'tax' are in the same sentence.

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I like the idea. As long as it is implemented so that only landlords can pay it directly. I.e. how flats' service charges are normally paid, not how council tax is normally paid.

I would think it will still effectively come out of rentals.

However it should reduce hoarding of million pound houses by old dears on the state pension in London

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I would be interested to see the impact of this policy. 0.5% isn't massive, but some things I can think of..

1) local council revenue would be directly related to property prices. What would a crash mean? Bins not getting collected (they are always saying they don't have enough money as it is)? Wouldn't it also incentivise councils (and probably government) to push house prices up as high as they can to maximise revenue (or at least do everything to stop a crash). I guess weighing against this would be affordability as this would start to limit growth in prices (though they are pretty good at coming up with schemes to make houses affordable).

2) I don't know how the current nationwide distribution of tax looks like, but could say Northen councils with low house prices end up with less cash than now, less investment in local development and keeping the area poor? In the South there may be a lot more cash for local councils, widening North South divide. though the increased cost of living due to this charge may soak up the extra money (or all low paid are renting off the wealthy).

3) Would it increase the levels of segregation, for example the income poor / retired all head to low house price areas. This further exaggerates the haves and have nots as it becomes harder to improve these low house price areas (probably further worsening North South divide). London becomes even more unaffordable. I guess this could break the camels back and cause a crash (but what about point 1). All low paid providers of services in the capital would have to rent off their wealthier neighbours (much like now then).

Just some very uneducated thoughts, and perhaps too 'doomsday' for just a 0.5% tax. Of course it could go the other way and drop prices to affordable levels, killing off buy to let in the process. Was anything similar seen in these other countries that already do this?

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I would be interested to see the impact of this policy. 0.5% isn't massive, but some things I can think of..

1) local council revenue would be directly related to property prices. What would a crash mean? Bins not getting collected (they are always saying they don't have enough money as it is)? Wouldn't it also incentivise councils (and probably government) to push house prices up as high as they can to maximise revenue (or at least do everything to stop a crash). I guess weighing against this would be affordability as this would start to limit growth in prices (though they are pretty good at coming up with schemes to make houses affordable).

2) I don't know how the current nationwide distribution of tax looks like, but could say Northen councils with low house prices end up with less cash than now, less investment in local development and keeping the area poor? In the South there may be a lot more cash for local councils, widening North South divide. though the increased cost of living due to this charge may soak up the extra money (or all low paid are renting off the wealthy).

3) Would it increase the levels of segregation, for example the income poor / retired all head to low house price areas. This further exaggerates the haves and have nots as it becomes harder to improve these low house price areas (probably further worsening North South divide). London becomes even more unaffordable. I guess this could break the camels back and cause a crash (but what about point 1). All low paid providers of services in the capital would have to rent off their wealthier neighbours (much like now then).

Just some very uneducated thoughts, and perhaps too 'doomsday' for just a 0.5% tax. Of course it could go the other way and drop prices to affordable levels, killing off buy to let in the process. Was anything similar seen in these other countries that already do this?

Who says the tax should be distributed in the same areas it is collected?

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Labour are just gagging to get in to every house every year and "value it".
They are creating a snoopers wet dream.

Every year, every house. An army of twats who will open every cupboard just in case you've made an ensuite and upped the value of your house accidentally.

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Who says the tax should be distributed in the same areas it is collected?

I guess I was reading into it as a 'local tax' suggesting it was for use locally. It could be redistributed, but in which case shouldn't it just be a national tax (like income tax) and then the central government distributes some of their tax take to councils based on some measure such as number of households, or through some kind of pitch process. Reminds me of an episode of Yes Prime Minister were Humphery wants to eliminate local government and centralise it all (not that I have an opnion on the merit of that). Would give the government extra cash to spend somewhere if they can get a surplus (or get councils to drop their spending).

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