Simon Jenkins (The great mansion tax facade, 16 February) fails to highlight two of the main facets of the current council tax.
Properties in poorer areas pay more tax than those of the same value in richer districts. A property in Newcastle-upon-Tyne is charged 42% more than one in Kensington and Chelsea that would sell for the same price. Second, council tax becomes a smaller proportion of the value as prices move up the scale. So, in Kensington and Chelsea the council tax on a property worth £240,000 is £711, or 0.3% of its value, but on one valued at £1.92m – eight times as much – the tax is £1,778, under 0.1% and just 2.5 times the levy on its cheaper neighbour. This is as if income tax were charged at a lower rate as incomes increased.
If the tax were charged at 0.1% on properties worth between £2m and £3m, rising in steps to 0.275% on £9m-£10m, the total of just under £19,000 would represent less than 0.2% in total – just the same as is paid by the owner of a house valued at £500,000. And it would be a poor year in which a £10m mansion did not go up by more than £19,000 – less than £2 in £1,000.
Harvey Cole
Winchester, Hampshire
• Simon Jenkins fails to grasp that adjusting council tax bands will not solve the problem of the super-rich paying low local taxes. When the council tax bands were created the assumption was that moderate increases in property prices would allow the government to adjust the bands from time to time.
No one imagined either that the high-value property market would rocket out of control – or that councils like Westminster and Kensington and Chelsea would encourage such a development (both sell council land to private developers rather than build much-needed housing). What is needed is a new approach to local taxes which takes into account land values. The current chaos in property values in London and the south-east is stifling social mobility and economic growth. A mansion tax, while not perfect, will begin to ensure that high-value-property owners make a fair contribution to taxation.
Cllr Guthrie McKie
Housing spokesperson, Westminster city council Labour group
• Simon Jenkins demonstrates that the only reason to prefer a mansion tax to reform of council tax is to ensure the money goes to central government, not local councils. He could have mentioned that since the tax will be mostly raised in London it is London councils that will lose out – while, as the Scottish Labour leader Jim Murphy gloated, the revenues will mostly be spent elsewhere.
Worse, it is to be used for curretn spending, not investment. This assumes that mansion tax revenue will continue indefinitely, which requires London house prices to remain at or above their current grotesque levels. London house prices are a disaster from which all Londoners except the super-rich suffer. Values in the mansion tax bracket do not exist in isolation: their rise pulls up the prices of more modest homes.
Allowing London house prices to be forced up to unaffordable levels is a crime against London for which all recent governments (and, shamefully, our elected mayor) share responsibility. The only legitimate use for mansion tax revenues would be on measures to bring down London house prices – mainly building social and affordable housing – and to alleviate the harm done to Londoners by the property bubble.
John Wilson
London
• More fundamental reform is needed than simply rebanding council tax. The current uncoordinated binary system of council tax and business rates is ill-conceived as well as unjust.
Other countries do it much better. In Japan, a single property tax, calculated by floor area, is levied on all buildings. The rate, set by central government, varies according to district and is adjusted for small domestic buildings (down) and large corporate ones (up). The tax is collected by local government, which keeps 55% and distributes the rest to prefectural and central government.
Something similar in the UK could be fairer, generate more revenue and be cheaper to administer. It would also prevent home-based workers becoming liable for duplicated property taxes on buildings they both live and work in.
Dr Frances Holliss
London Metropolitan University
• If Labour and the Lib Dems insist on introducing a property-based tax, why not call it a property tax and levy it on all properties owned by individuals and businesses? The effect would be more fairly spread across the country. Under a mansion tax, a “buy-to-let” investor with a string of individual assets under £2m goes scot-free but would not under such a property tax.
Asaf Mir
London
• Simon Jenkins gives a clear argument for extending the council tax bands. He goes further to state that the mansion tax “keeps in place a deeply unfair council tax so Balls can get his hands on a near trivial source of extra money”. The extra money argument is, however, flawed. If the local authority revenues were to increase, the central government grants would fall by the amount of the additional income. This means the government would have lower expenditure and hence more money to spend on, for example, the NHS. (On the examples given in the article these grants are currently £152m in Camden and £151.4m in Westminster.) This emphasises that central control of finance is more important to past and future chancellors than any reform of the deeply unfair system.
David Ellis
Comberton, Cambridgeshire
• Complaints are made that the proposed mansion tax would be unfair in hurting asset-rich but cash-poor older people who happen to have bought in London, while cash-rich property speculators and landlords who have bought expensive property in London could afford to pay. A fair solution would be for councils to charge double council tax on properties whose owner is not on the electoral register at the property.
Richard Cooper
Chichester, West Sussex
