Topic: | Osbourne's Mansion Tax | |
Posted by: | Tom Pike | |
Date/Time: | 02/05/15 18:58:00 |
Lorne, the CEBR figure of £350k revenue loss was calculated when the stamp duty was 7%. Putting that 7% value into your erroneous calculation to make a comparison gives a figure of £700m. You're way off on the number due to the errors I've detailed. In fact the Centre of Policy Studies, in the link you provided, estimates the revenue loss after the new stamp-duty rate of 12% came in as 1/6 of the take, so £180m of the estimated £1.1bn revenue. That might be expected as the the change in stamp duty would depress prices before any mansion tax was applied, reducing the additional effect. It does, however, prompt the question as to the relative effects of last December's stamp-duty increase and the proposed mansion tax. It's not so difficult to estimate how much of Labour's proposed mansion tax Osbourne has already sneaked in. He upped stamp duty from 7 to 12% at the top end, so for a £3.5m property that's an additional £175k on the sale collected on average every ten years, using your estimates. Ignoring a discount rate for the moment, that's an equivalent annual tax of £17.5k. The mansion tax will collect £1.1bn a year from your estimated 100,000 houses, or £11k a year. Even applying a 2.5% discount rate, at £14k a year present value that's still higher than the mansion tax. So Osbourne has played a blinder. While misdirecting just about everyone about Labour's mansion tax, he has actually introduced in plain sight a larger effective tax on high-value properties. Of course the Conservatives won't admit this, and both Labour and the Lib-Dems would like to pitch the mansion tax as their own popular measure, but George got there first! |