I recently noted that Tim Montgomerie, the influential editor of ConservativeHome, had declared his support for greater taxation of property (including a version of Vince Cable’s “mansion tax”), a cause the New Statesman has long championed. Since then, others on the right have joined him. In a piece on ConservativeHome today, Tory MP Mark Reckless, rightly noting that we tax property less than almost anywhere else in the world, calls for a range of new property taxes to replace the 50p rate. He calls for the coalition to ensure the rich pay stamp duty (many avoid it by putting properties into shell companies), to levy capital gains tax on non-UK residents and to introduce a mansion tax, although with the threshold set at £5m rather than £1m or £2m. In return, he says, the coalition should reduce the 50p rate to 45p and the 40p rate to 38p.
Elsewhere, the Spectator’s James Forsyth writes about the growth of the “undeserving rich”, those who have acquired huge wealth through illegitimate means. Forsyth cites the example of bankers and oligarchs but, to my mind, this category should also encompass those who have benefited immensely, through little effort of their own, from the dramatic rise in house prices over the last decade. As NS editor Jason Cowley argued in a October 2010 cover story (“The coming battle over land and property“), there is a strong meritocratic argument for heavier taxation of unearned wealth (inheritance, property and land) and lighter taxation of earned income. Property taxes are also harder to avoid than those on income (you can’t move a mansion to Geneva) and reduce the distorting effect that property speculation has on the economy. For the psephologically minded, it’s worth noting that high-end property taxes are popular. Last week’s Sunday Times/YouGov poll found that 63 per cent of the public (including 56 per cent of Tories) support a mansion tax, with just 27 per cent opposed (38 per cent of Tories).
Yet most on the right remain instinctively hostile to Vince Cable’s call for greater taxation of land and property. They should realise that they are missing a trick. In an age of austerity, the Tories cannot afford to be seen as the party of the wealthy. Replacing the 50p rate with a range of new property taxes would change the terms of debate and send Labour back to the drawing board (the 50p rate may not raise as much revenue as Ed Miliband and Ed Balls hope). Simply abolishing the top rate is neither morally, nor politically, nor fiscally credible. The right should not miss an opportunity to demonstrate that it can think imaginatively about wealth, property and opportunity.
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