The ‘Wood & Vale’ reports;
“Labour’s shadow chancellor Ed Balls has moved to reassure homeowners in Westminster that they will not be forced to sell up due to his proposed mansion tax – insisting the policy will be “fair and proportionate”.
Writing exclusively for the Ham&High series, Mr Balls said he had noted concerns raised by his colleagues, including Westminster North MP Karen Buck, and will ensure there are “protections for pensioners and others on modest incomes” living in homes worth more than £2million who would be unable to pay the proposed tax, which would be used to help shore up the NHS.
Mr Balls’ comments are seen by some as an exercise in damage limitation for Labour candidates set to fight next year’s General Election in constituencies hardest-hit by his mansion tax, including Westminster North where two-bedroom flats in some of its most desirable streets already sell for £2million or more.
Mr Balls maintained that “less than three per cent of homes” in London would fall into the mansion tax bracket, helping raise £1.2billion each year towards ensuring the nation has the GPs and nurses it needs – but the tax would affect almost one in five private homeowners in Westminster North.
Elaborating on the “difficult but fair” tax, the shadow chancellor reveals that anyone living in a £2m-plus home and earning less than £42,000-a-year will not have to pay the tax until they sell their home, at which point the government will take an accumulated amount.
And, contrary to early fears that the tax could be as high as £12,000 per year, those living in homes worth between £2million and £3million at today’s prices would be taxed £3,000 per year, roughly the same as the top band of council tax.
Lindsey Hall, who will fight Ms Buck for the Westminster North seat on a Conservative ticket next year, branded it a “tax on aspiration and on ordinary family homes” in which families and pensioners will be “pulled down because of the politics of envy”.
But Ms Buck told the Wood&Vale she backed the mansion tax now that safeguards have been built in.
“I think it is basically right that we seek to be sure that people in high-value properties are making a greater contribution,” she said.
“We are avoiding people having to sell their homes by building into the system the ability to defer the charge. The critical thing is to ensure people who have high-value properties who don’t have high incomes are not forced to make a difficult decision.”
She added: “If we want to offer a decent quality National Health Service, we have to ensure there is a reasonable fund in order to pay for that.”
Asked if it was unfair that cash-poor residents who happen to live in homes which have rocketed in value over the years should be forced to pay another tax, even if only when the home is sold, Ms Buck said: “If it isn’t fair then somebody would have to abolish the inheritance tax as well, and the principle of existing council tenants deferring their major works bills.”
She said there existed “a fundamental unfairness in the way we treat property,” with homes worth £50million currently subject to the same taxes as those worth £1million, and backed the proposed “progressive banding system” that tracks house values as they rise, unlike council tax.”