This is a good question


Instead of all this blathering on about a mansion tax why don\’t they just create more council tax bands?

Simon Jenkins thinks it\’s because council tax stays locally while the mansion tax would go to the Treasury. Is that really it?

26 thoughts on “This is a good question”

  1. The only reason I can think of is if you create a new higher bands, then some people will (rightly) say that relative price movements since 1991 mean that they shouldn’t be in that band. So you will have to have a general revaluation, which will cause all kinds of embittered losers (and of course winners, but they won’t be as happy as the losers).

    I don’t quite know how you’d introduce a mansion tax without a general valuation but perhaps it could be done without impinging on the vast majority of homeowners.

  2. I thought this was a good piece by Jenkins.

    I had no idea that Wales had introduced a council tax “mansion” band I as far back as 2005.

    Also thought it was useful being reminded that back in the 80s people in £5m South Ken houses were paying rates of £8,000 pa. That’s £15,000 today (RPI adjusted).

    Today’s Band H Council Tax in K&C is £2,151.44.

  3. Matthew

    You’re making it all more complicated than it need be. You only need to revalue those properties currently in Band H. And rank them into H, I, J,or K (however many you require).

    Currently all properties in Band H were worth £320,000+ in 1992. So that included nice 4 bed houses all the way up to Blenheim Palace. All this does divide these houses into a couple or more separate groups.

    Sure you miss out on a Band G house that has been tarted up (or is in a area gentrified since 1992) and should now be in Band H, but, hey, can’t cover everything.

  4. I realise that but I think ‘hey, can’t cover everything’ wouldn’t be enough and people who were in Band K on 1992 valuations but believe they should be in Band J if you revalued would complain sufficiently to make it unworkable.

    And you couldn’t revalue only the 320k+ ones without doing all of them. But it’s only a suggestion why they don’t take what seems the easier options.

  5. On the rates in 1980s point, although it’s a very useful reminder, wasn’t rates (and a forthcoming revaluation) seen as so politically damaging for the Tory party that they leapt at the poll tax?

  6. Other than the electoral suicide element its a good idea. And the government could simply cut the central grant to councils by the amount they raise in higher Council Tax.

  7. The problem with rates was that in England revaluations could be put off for a long time (or forever?). But in Scotland these things were better organised and it was the results of a regular rating revaluation that led to cries from Scotland for something better – i.e. better for people in houses that attracted high rates bills – which turned out to be the Poll Tax. (All talk of the Poll Tax being forced on Scotland as a nasty English experiment was complete twaddle – deliberate lying by the Labour Party.)

  8. Council tax on a property should be a percentage of the largest value boasted by the owner over the course of a calendar year. You’d either raise plenty of tax or get people to shut the fuck up about how much their house is supposedly worth, both of which are desirable outcomes.

  9. dearieme: The Conservative Party put the poll tax proposal in its manifesto for the 1987 election. The result of the election was that it received 24% of the votes cast in Scotland, and won 14% of the seats. In England, it received 46% of the votes cast, and won 68% of the seats. So it decided to introduce the poll tax in Scotland first.

    That is, the Poll Tax was first tested in Scotland despite having been decisively rejected by voters there. It seems that you’ve caught the Labour Party deliberately telling the truth.

  10. “And you couldn’t revalue only the 320k+ ones without doing all of them.”

    Why ?

    What’s the point in revaluing a 2 bed flat that was Band C in 1992 and would still be Band C (inflation adjusted) in 2012 ?

    Jenkin’s point is that the 1 million or so Band H properties in the UK should be divided into, say. three separate categories so that council tax could be raised on the “I”s and “J”s.

  11. That Council Tax idea would seem to keep all the money raised from taxing mansions in Kensington in .. er .. Kensington.

    Unless I missed something?

  12. PaulB

    I’m not sure it was just the Poll Tax that led to the Tories results in Scotland in 1987, but you are correct that is what led to it being used as a tested for the Poll Tax, which was a not unreasonable idea ( everyone pays something and it tries to limit the free riders Labour is so fond of creating) but extremely badly implemented….

  13. Poll tax also had the advantage of having millions of people who were better off under it. Media tended to concentrate on those complaining, usually those having to pay more.
    So millions better off, millions worse off. Not enough political problems to lose a general election over.

  14. How does rates create free riders? Everyone lives in a house and pays indirectly because either their landlord pays or their parents if they live at home etc.


    “The belle epoque era aristocracies tended to have very low tax rates. This was because the society was ruled by the wealthy aristocracies. Rather than tax heavily and redistribute the money back to themselves, it was easier to not tax at all. But when the masses took control of government the massses raised the taxes and distributed it to themselves.

    In a government ruled by the masses, there will be no head tax, but will rather be a progressive income tax. There is no point to a head tax that would simply get redistributed back the payers.

    In a colonial land, ruled by wealthy land owners, there will be a very low property tax, but instead there will be a head tax. The masses will be forced to pay a tax to live, and then forced to work in order to pay that tax.”

    You can tell who has the power in a society by the way it taxes. We have a progressive income tax and not a poll tax to the extent that the masses have power (they riot).

    We don’t have heavy land taxes (reduced at mentioned by Shinsei67 in comment #2) to the extent that landowners vote (and non-landowners want to become landowners themselves instead of opposing the existing landowners).

    Mark Wadsworth is right about Ricardo’s Law of Rent: if income taxes go down, land rents go up.

    But good luck to anyone trying to get LVT imposed as long as landowners have power. The fact that we don’t have a LVT demonstrates that they do.

  16. Matthew

    “Well because some flats in Band C would now be in Band H and in Band H in Band C and so on.”

    No it wouldn’t.

    It would be inflation adjusted.

    A Band H property in 1992 worth £350k would today be a Band H property worth £1m.

    A Band H property in 1992 worth £700k would today (under Sir Simon’s proposals) be a Band J property worth £2m.

    Thus you only need to value the properties that were Band H back in 1992. And separate them in three or so discrete bands. Forget about the actual valuation numbers involved. Just take it that the top 10% of properties will be Band X, the next 10% Band Y etc.

    There might be some Band C properties that because their area has been so gentrified that they have moved up through the bands but you have to draw the revaluation line somewhere.

  17. One reason they dont want a revaluaton is that home improvements don’t legit considered until either the house is sold or there is a revaluation. At which point a large proportion of properties will move up a band, even if the band increases are indexed.

    I don’t know, but I suspect that creating new bands would somehow for a revaluation., otherwise that solution would have b.een chosen.

  18. Slightly puzzled why your second sentence says ‘no it wouldn’t and then your final paragraph admits it would.

    Are you right that you would have to split up the 1992 Band Hs? Weren’t they given specific valuations back then?

    But I digress. The point is that some people in new band J would say ‘but mine’s worth less than Xs in band G’ and complain, sue or vote Labour.

  19. The pundits also neglect to mention that back in the good old days, the rateable valuation may have been a *lot* more than council tax.

    *However* mortgage interest on the property was tax deductible.

    The rot set in when the local franchise was extended from just ratepayers to the tax eaters.

    No one in the gruniad comments wants to remember the scouse class warriors screwing the moniohome owners to fund their attempt to overthrow the state…..

  20. You can only revalue and split up Band H based on 1991 values, or you can revalue the lot at current values. You can’t revalue Band H at current values and use those values to split up band H into 3 (or more) new bands. Because if you do that you’ll end up with a lot of people who are still in Band H, but whose houses now have a formal valuation of less than the market value of houses in bands below. Mainly people who had bigger houses in non-SE England areas, whose houses have not grown in value over the last 20 years as much as formerly cheaper ones in the SE/London.

    No party dare revalue property prices in England. Its political dynamite, whether you are red or blue. Despite there being both winners and losers, probably in roughly equal measure as with the poll tax, the losers will create more stink than the winners.

  21. I agree it’s theoretically possible to revalue just the that were band H in 1992. But is it really possible to do retrospective valuations for what properties would have been worth 20 years ago? Bear in mind we’re talking about the larger properties, so they’ll be fewer sales to compare with. Any surveyors/valuers out there?

  22. Paul B, you are ignoring my point. The pressure for a replacement for Rates came from Scotland.

    Pretending that you can infer from %ages of votes cast exactly which policy they were cast about is loony. Or dishonest.

  23. dearieme: I’m sure you’re right that there were some Conservative voters in Scotland who were unhappy that their rates went up in the revaluation. But not enough to elect many Conservative MPs. The tax was imposed on Scotland because a plurality of votes in England went to the Conservatives.

  24. The real driver behind the community charge was an attempt to make the voters in areas run by Militant to have to pay *something* towards the insane costs of their councils and put pressure on them to return to sanity. Given that there were proportionately more Militant councils in Scotland it probably made more sense to start there (although I should have chosen Liverpool).
    Reverting to Tim’s question – extending the tax bands to Z will do a little to redistribute disposable income within Westminster and Kensington but nothing to transfer wealth from Tunbridge Wells to Ebbw Vale. Socialist centralisation has created a Uniform Business Rate that transfers income from areas where people work to those where they don’t but it backed away from doing the same on domestic rates knowing it would arouse a storm of protest (well, why *should* I pay to finance the political propaganda distributed by the Mayor of Tower Hamlets?)

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