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Is Mansion Tax Our Only Option?

The mansion tax has emerged as a hot topic once again after Labour leader Ed Miliband received a 'dressing down' on ITV's The Agenda.

But, what is the mansion tax and are there any alternatives?

Who Will It Affect?

Ed Miliband appeared on The Agenda this week to present his plans for a mansion tax on homes that cost over £2million to raise public funds. He quickly came under fire from Myleene Klass, media personality, who slammed his plans, saying they'd hit "little grannies" the hardest, living in simple London homes rather than the super-rich who the tax is aimed at.

Finding a way to tax those with the broadest shoulders in society is just one challenge any government will have to take on. A Commercial Property Solicitor at SM Commercial said he "can see where Ed is going with this proposal" but the point made by Myleene is valid particularly in London. Myleene may have oversimplified Labour’s proposals, however it raises an valid issue.

Would this ‘mansion tax’ raise the funds Labour have suggested it will? Some think not. There are however alternatives to it which have been suggested.

Land Value Tax

One alternative to mansion tax, and something that is being campaigned for, is a 'land value tax' which raises public funds by an annual charge on the value of the land and not the property itself.

The land would be valued by itself, not including any improvements, and any vacant land would be valued at the same price as surrounding land with properties on it. The land would be valued by market evidence based on the best use of it within planning regulations. If these regulations were altered, the valuation would be also be changed.

Land and property taxation is an area being discussed actively by commentators who are considering whether the current SDLT (Stamp Duty Land Tax) regime is the fairest way to tax land and property.

This issue is not going away in the short term.

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Dated: 18/11/2014

Author: Greg Cox

Landlord - Residential Letting Contract

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