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Miliband Admits Mansion Tax Poorly Thought Through

I got an email from Ed Miliband in reply to one I sent him about a job creating idea as an alternative to their impractical Mansion Tax. See Entrepreneur's Credits. Buried within his bleat about 'fairness' and all the other popularist mantra about 'millionaires' needing their arses kicked, was a paragraph revealing how little they'd actually thought through their Mansion Tax promise:

"We recognise that it is important that any mansion tax should be designed to overcome issues affecting those who may be capital rich but income poor. There are many ways in which this could be done, such as deferring the charge for some people, and our Treasury team is consulting on the best way to do this. We will ensure that the details are right so people would not be thrown out of their homes."

"Deferring the charge"? So if you can't afford to pay the tax from income (that's a fine of £20,000 every year for owning a £2m house), when you sell it, not only will you have to pay the higher 7% stamp duty, you will also have to pay the accrued tax of 1% of its value for every year you've owned it since the tax was imposed. Say you own it for 30 years. That's 37% of its value you have to give to the government when you sell, presumably plus compound interest on the tax debt. So if you sell a property for £1.99m, you pay just 5% stamp duty and get a cheque for £1.9m. But if you sell for £2m, you only receive £1.26m less the compound interest (which will probably be more than the value of the house after those 30 years, especially if high inflation rears its head again). Looks like renting it out will be the only option. You'd be mad to sell it and crystallise all that tax.

And £2m doesn't go very far these days in London. How will a property ever sell between £2m and say £3m? If you own one, it's now only worth £1.99m. And then all properties currently valued just under £2m are going to look poor value compared to the ones being discounted to compete with them. So those properties will have to be discounted as well.... right the way to the bottom of the market. Negative equity anyone?

"We will ensure that the details are right so people would not be thrown out of their homes." I think we have a right to know those details before we are asked to vote on whether Labour should be allowed to run this country again.

I say again. Don't penalise job creators. Encourage them to take risks to create more jobs!
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