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publication date: May 11, 2012
Vince Cable’s pet hobbyhorse, Mansion Tax, is daft, irresponsible and unworkable – apart from that, a great idea! It will have such a profound effect on the £1m plus residential property sector that a great deal of the revenue/foreign investment earned by Stamp Duty, VAT, Income and Corporation Tax, through estate agents earnings, will be lost.
What Cable thinks he will receive by way of £1.6bn revenue for the Exchequer will be dwarfed by what he will lose. Remember, that on a typical £2m house, if the tax is one per cent, it will equate to £20,000 that requires approximately £40,000 to be earned. So effectively, in order to open the door of your £2m house, which, if you are lucky will be in pre-tax earnings, you have a huge burden before you even turn the lights on. And, if you consider that this probably will apply to a 2000sqft property, perhaps 1000sqft in the better parts of London, this cost will be penal and there will be an exodus of wealthy buyers fleeing to Monaco, Dubai, Geneva and anywhere else to escape this harsh regime.
As it is, an American family of four will pay a levy of £200,000 for their family, which they hope will be credited on their USA tax bill. On top of this could be a Mansion Tax and that is certainly enough to change their sentiments about living in this country.
The mere mention of a Mansion Tax is frightening to some and it is typical of a left wing ideologue, with accompanying rhetoric, trying to ‘soak’ the so-called rich to make up for over-spending elsewhere.
What Cable does not consider is the cash-poor widow living in a house that she bought 40 years ago, but due to the increase in it’s value, is now an unaffordable millstone around her neck. This is a big worry to some vulnerable groups.
Yes, there is a form of wealth tax in France and property taxes in America but you need to look at the big picture of taxation to see that you do not start cherry picking taxes, since in the United Kingdom for instance, thanks to the former Labour Government, we have one of the highest direct taxation regimes in the world. You can’t simply ignore this fact and focus on a Mansion Tax that will probably have the most profound negative effect of any other measure since Margaret Thatcher’s Day.
After the meticulous work of successive governments, trying to make London the colossus of financial services in the world, this new legislation will rapidly destroy all the good work carried out by others over the last 30 years.
The domicility tax, already implemented, has already deterred a number of wealthy potential residents from abroad and the Mansion Tax would be the last straw.
With this tax we would have the most fiscally draconian tax environment in the world, which would return us to the Stone Age in terms of our being the financial services hub of the global economy.
Frankfurt, Paris, Berlin, New York are all desperate to return the wealthy investors to their shores. Allowing them to do so would be a tragedy for the United Kingdom which depends so much on this sector for the stimulation of the growth of the nation now that our earnings from manufacturing are so modest. The financial services sector is so vital to the United Kingdom that nothing must be done to put it in danger and it must be protected at all costs from armchair socialists who have no clue about these matters.
Lets say allelujia to David Cameron and the Conservative party’s valiant attempts in Brussels before Christmas to protect our precious financial services sector from over-regulation by the European bureaucrats who would love to undermine him. France has its fiefdom protected with CAP and we have our financial services – let’s protect it from within.
Lest we forget, these foreign nationals bring much needed earnings to a country that usually suffers from a huge trade deficit. They buy properties in the United Kingdom, pay substantial Stamp Duty Tax, set up businesses here that employ people and generally help to stimulate demand. Which, for a country with a shrinking economy, is oxygen. We need these people to be attracted to this country and we are far better off with them than without them. We loose them at our peril.
So, Vince Cable, take note from the Captain of the Costa Concordia and put a ‘zip on the lip’ and keep some of
these ridiculous ideas to yourself – they do not help.
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