Mansion tax prospect attacked
REAL estate adviser Savills have attacked the prospect of a mansion tax, after Labour leader Ed Miliband announced he will force a Commons vote on the issue.
Savills say the tax would be inefficient, raise little revenue at great cost and may unintentionally hurt the asset-rich, cash-poor owners of high-value property.
"The high-value end of the market was already making a disproportionately high contribution to the total tax take, even before last year's Budget," said Lucian Cook, director of Savills' research.
"Coming on top of the additional taxes introduced less than a year ago, talk of a mansion tax will be very unwelcome. Not only would such a tax be costly to administer, our analysis suggests that it would not be a big revenue raiser."
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Mr Cook says that, contrary to popular perceptions, top-end property owners already make a disproportionately high contribution to tax revenues.
The situation before the 2012 Budget was as follows:
The UK already had by far the highest property tax take of any country in the Organisation for Economic Co-operation and Development
The highest 1.6 per cent of residential property sales in the UK yielded £1.2bn in 2010, the equivalent of 26 per cent of all stamp duty receipts
The top 0.7per cent of housing stock held at death contributes 36 per cent of inheritance tax receipts from residential property
The non dom levy, which will rise from £30,000 to £50,000-a-year, already collects revenue from owners of high-value property domiciled overseas.
Savills estimate an increase from 4 per cent to 5 per cent on £1m-plus property introduced in April 2011 will have added about £290m of additional tax, and that increasing the rate from 5 per cent to 7 per cent for properties over £2m will add £370m.