Bournemouth: Owners of homes worth more than £1 million would have to pay an extra property tax to subsidise tax breaks for the poor under plans announced by the Liberal Democrats on Monday.
The proposed 0.5% levy, along with closing tax loopholes exploited by the most wealthy, would help fund a rise in personal allowances to remove four million low paid workers and pensioners from income tax.
“That is not a big sacrifice,” party leader Nick Clegg told the Independent newspaper from his party’s autumn conference in Bournemouth.
“It is a perfectly reasonable thing to ask of people who have got properties of that value, and it’s completely in line with how pretty well every tax system in the world works.”
The plans may help ease anger among party activists over Clegg’s threat to axe a long-standing pledge to scrap university tuition fees because of a looming squeeze on public spending.
The proposals include raising annual personal tax thresholds to £10,000 from £6,500.
The party’s treasury spokesman Vince Cable said existing local property taxes were unfair as they levied the same rate on £30 million properties as on homes worth 40 or 50 times less.
“We have seen the super-rich pouring their money not into job creating businesses but into acquiring mansions,” Cable said according to excerpts of a speech issued in advance.
He said the “small levy” on the value of properties over a threshold of £1 million would itself pay for the cost of taking 300,000 people on low income out of the tax bracket.
It would mean a £2,500 charge on homes worth £1.5 million and £15,000 for a £4 million property.
Cable noted last week in a pamphlet outlining proposals for spending cutbacks that “recurrent taxes on immovable property” had the least impact on economic growth.