Labour: we will tax rich home owners

LABOUR leader Ed Miliband yesterday declared war on people who own expensive homes, pledging to impose a crippling tax on properties worth more than £2m.

The revenue would be used to partly reintroduce the 10p tax rate abolished by Gordon Brown.

Shadow chancellor Ed Balls said introducing a tax on 70,000 high-end houses – 91 per cent of which are in or near the capital – could raise up to £2bn a year. This is equivalent to an annual cash payment of around £25,000 from affected homeowners and would be a very substantial tax hike.

Lucian Cook of Savills suggested asset-rich but cash-poor homeowners, including pensioners, could be forced to sell up: “It will be a nightmare to administer because anyone close to the threshold is likely to contest their valuation.” Others said the tax was an attack on ambition, success and aspiration.

Miliband said the proposal was not yet a manifesto pledge.

Last night the Institute for Fiscal Studies criticised the 10p plan, saying “more economically sensible” options were available to achieve the same aims.

Conservative MP Robert Halfon, who is leading a campaign to reintroduce the 10p tax rate, told City A.M. that Labour had “made this up on the hoof”.

“It’s a bit of a sweetener for the Eastleigh by-election. I don’t believe you cut tax by raising another. It would mean revaluing every house in the country,” he added. The Treasury is considering Halfon’s more ambitious plan.