Keir Starmer and Rachel Reeves are doomed – distrusted by most Labour MPs and detested throughout the land. Sir Keir probably won’t be PM this time next year and Rachel will no longer be Chancellor.
But they’re going to fight to save their skins. They intend to appease their increasingly Left-wing party with old-fashioned class warfare, which they believe – mistakenly I’m sure – will go down well with voters.
When Ms Reeves was asked a couple of weeks ago whether higher taxes on the wealthy would feature in next month’s Budget, she said ‘that will be part of the story’.
The better-off should prepare themselves for a smorgasbord of soak-the-rich measures.
Yesterday’s Mail on Sunday convincingly suggested that one plan circulating in Rachel’s head is to whack a new mansion tax on owners of properties worth more than £2 million.
They would face an annual charge of one per cent of the amount by which their property is deemed to exceed that value.
Demonises
So, owners of a house worth £3 million would pay the revenue an extra £10,000 a year, while a property worth £4 million would attract an annual mansion tax of £20,000. And so on. This would be on top of existing council tax.
Of course, the Chancellor might set the threshold lower. Houses held to be worth £1.5 million could be drawn into the net. But, at least in the first instance, she is likely to concentrate on people whom she demonises as rich.
‘Keir Starmer and Rachel Reeves are doomed – distrusted by most Labour MPs and detested throughout the land. Sir Keir probably won’t be PM this time next year and Rachel will no longer be Chancellor’
A mansion tax has of course long been cherished by the party’s Left. It was proposed in Labour’s 2015 party manifesto (rejected by the electorate) when Ed Miliband was leader.
Yet even Miliband proposed a less punitive rate than Ms Reeves is reportedly contemplating as she seeks to resurrect one of her party’s worst ideas.
There are reckoned to be almost 150,000 homes in the UK worth more than £2 million, the majority of which are in London and the South-East. Ms Reeves wants most homeowners to believe she has no intention of clobbering them.
How much money would she raise? Northwards of £2 billion, it is suggested. That wouldn’t go very far in filling the £40 billion hole the Government has opened in the public finances, but that isn’t her main purpose. She wants, above all, to feed the ravening beast that is Labour class envy.
Extending VAT on private school fees and inflicting a new inheritance tax on farmers constituted a mere hors d’oeuvre to whet the appetite. Rachel Reeves is now moving on to the main course.
A mansion tax is a terrible idea – unjust and economically damaging. I also believe that, if the Government goes ahead, it will be unpopular.
The Prime Minister and Chancellor are deluded in thinking it will save their skins.
Let’s first consider the enormous practical problems of implementing a mansion tax. People fortunate enough to own expensive houses won’t calmly accept a valuation by a council jobsworth if it takes them above the crucial £2 million threshold.
‘Yesterday’s Mail on Sunday convincingly suggested that one plan circulating in the Chancellor’s head is to whack a new mansion tax on owners of properties worth more than £2 million’
In fact, there will probably be endless disputes about almost every assessment. A house is worth only what someone is prepared to pay for it, not what the Government dictates.
The man from Whitehall may declare that your home is worth £3 million. You may insist its value is considerably less.
Let’s suppose that these arguments could somehow be resolved, though the process would inevitably be drawn out and Rachel Reeves – or, much more likely, her successor – would have to wait a long time for their money.
Then there are huge questions of equity. Imagine a middle-aged couple who have worked and saved and are eventually owners of a house worth more than £2 million, though they still have a large mortgage.
Is it fair to saddle them with extra liabilities of thousands of pounds for which they haven’t budgeted? Of course not.
Imagine too – this is an even more morally troubling example – an elderly couple who bought their house 40 or 50 years ago. It now happens to be worth more than £2 million, but they have a small joint income and don’t have the money to pay a swingeing mansion tax.
I know such a couple. They are far from rich but their house is valuable, though somewhat dilapidated. They don’t want to move from a home they have occupied for so many years. Even if they did, they would face crippling stamp duty. They couldn’t possibly pay Rachel Reeves’s mansion tax.
Labour, though, will want the money now, even though it will be receiving a huge chunk of the value of the house in the form of inheritance tax when the couple die.
Is there no limit to the Government’s covetousness?
Dystopia
Younger and more fortunate owners of valuable houses might be in a position to move. But some of them won’t be happy simply to downsize. After all, Labour could lower the mansion tax threshold and so ensnare them a second time.
No, just as higher taxes on non-doms are already driving rich foreigners abroad so a mansion tax would encourage some people to up sticks, and take what remained of their wealth out of the socialist dystopia that Starmer and Reeves are creating.
At one point in the 1970s Labour increased the top rate of income tax on earned income to a crazy 83 per cent and the top rate on investment income to an unbelievable 98 per cent.
Britain was a pinched, drab place (I lived through it and remember it well) in which aspiration had practically died and hard work was unrewarded.
That is the unhappy land to which the beleaguered Rachel Reeves – straining to appeal to blind, antediluvian and envious Labour – is in the process of returning us.
She would be wrong to think that her plans will go down well with the electorate. People will see that they are the product of envy, and that they represent an extra layer of tax on an already overtaxed nation.
Sclerosis
Just as successive opinion polls have shown that many voters are opposed to inheritance taxes that are unlikely to affect them personally in the foreseeable future, so I believe that public opinion will recoil at the injustice and meanness of Labour’s mansion tax.
‘A mansion tax is a terrible idea – unjust and economically damaging. I also believe that, if the Government goes ahead, it will be unpopular’
Unlike the failing, unpopular Labour Party, most voters don’t want the class warfare, envy, division and economic sclerosis towards which Reeves and Starmer are dragging us.
Will the Chancellor stay her hand at the eleventh hour, or will she forge ahead with a policy that would inflict injustice and hasten our economic decline while doing nothing to fill the widening hole in the nation’s finances?
The auguries aren’t good. Reeves has recruited Treasury Minister Torsten Bell to help her prepare the Budget. Bell worked as Ed Miliband’s director of policy, when he was a major player in the misguided team that planned a mansion tax.
He has long dreamed of reviving it.
Rachel Reeves’s desperate attempt to appease the Left won’t save her. They’ll get rid of her and Starmer. All that will remain of them is their petty and envious taxes – on which even more determined Labour class warriors will proceed to build.
