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Eric Pickles: A mansion tax would be a "big mistake"

By Tim Montgomerie
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The Secretary of State for Communities and Local Government is unmistakably clear in this morning's Telegraph. Hard-working home owners “put a lot into this country and don’t take a lot out” he tells Robert Winnett. He tells Liberal Democrats who support a so-called mansions tax that it would be a "big mistake":

“We as a Government have got to understand that middle-class families put a lot into this country and don’t take a lot out. It would be a very big mistake to start imposing taxation on the back of changes in property values, particularly with big regional variations... People will suddenly find themselves in a mansion and they hadn’t realised it was a mansion. If it is only going to be mansions, the kind of thing you and I would regard as a mansion, it ain’t going to raise very much.”

He warns that a mansions tax would require a nationwide revaluation of houses across the UK and that would cost £250 million. “It’s a red line for the Coalition," he tells The Telegraph, "The Coalition has said unambiguously that we won’t be revaluing in the lifetime of this parliament.”

Regular readers will know that I support a rebalancing of the tax system so that wealth is taxed relatively more and income relatively less. Let me make three brief comments on what Eric Pickles has said today:

One: The best thing would be for the Coalition to cut the overall burden of tax. Republicans in America correctly recognise that their nation has a spending problem, not a taxing problem. Britain is in the same position yet George Osborne has increased a number of taxes including VAT, CGT, green taxes and introduced a bank levy. The UK tax burden hasn't been this high in the post-WWII period and it ain't helping the recovery.

Taxladder Two: If we aren't going to cut the overall burden of taxation (my favoured priority) we should look at rebalancing the tax system. No tax is perfect but on the right I draw up a ladder of taxes. I'd like to move to a position where we tax income less and wealth more. Not punitively but to reinforce the Conservative Party's status as a party that rewards rather than flattens social mobility. As Ross Douthat has written: "Conservatives need to recognise that the most pernicious sort of redistribution isn’t from the successful to the poor. It’s from savers to speculators, from outsiders to insiders, and from the industrious middle class to the reckless, unproductive rich."

Three: There are better ways of taxing wealth than the Liberal Democrats' original mansion tax. The FT (£) looked at one of those ideas earlier this week. Another simpler remedy might be a 'Z council tax band' for large properties.

For those interested in thoughtful further reading on this I recommend Bagehot's latest blog; Forget class war, the real fight is between the generations.


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