Despite the misgivings of most would-be Labour Mayoral candidates, the national party remains wedded to the idea of imposing a so-called mansion tax on the capital.
Today Ed Balls has set out some tweaks to the policy to try and make it seem fairer, including a nod towards critics who point out that longterm residents of areas in which prices have risen may be cash poor and struggle to pay.
Balls’s answer is to allow this group – provided they earn the arbitrarily chosen sum of £42,000 – to defer payment.
But this doesn’t really address the issue of ability to pay – why is the new tax affordable to someone earning £42,001 but not £1 less?
And why should people on lower incomes be forced to defer their liability when we don’t ask them to do so with Council Tax where, if they’re genuinely unable to pay, they can get a reduction in their monthly bill?
There’s a risk these people will feel under pressure to sell up before the tax comes in, thereby turning existing mixed income communities into exclusive enclaves for millionaires.
But even people who think it’s ok to tax people without any evidence of their ability to pay, or who think it’s fine to force the asset rich, cash poor to sell up and cede whole streets to the rich, should be concerned about what the proposed tax says about Labour’s approach to devolution.
This policy will affect London more than any other area or community – 90% of homes affected by it are in London – yet it’ll be imposed by a national government regardless of the views of the communities it’ll hit hardest or the politicians they elect to represent them.
Labour could have promised to legislate to allow councils to impose this tax and then fought local elections on a promise to make use of such powers.
Or, if they felt this would hand too much power to vested interests in a small number of boroughs, they could have given the power to impose the tax to City Hall and let all Londoners have an equal say in its introduction at the next Mayoral election.
That would at least have been in keeping with the party’s claimed interest in devolving more power and money to the English cities and increasing the amount of taxes controlled by local politicians, a position restated just last week by Sadiq Khan, Labour’s shadow London minister who said:
“Only 7% of all taxes raised from Londoners and London businesses are spent by the different levels of London government, whereas the figure is nearly 50% in New York. Labour has committed itself to devolving significant public service funding and responsibility to London’s government, as well as more fiscal autonomy.”
But rather than trust the people of London, Labour shows it still prefers the centralising, top-down approach by increasing – rather than decreasing – the amount of taxation national government controls the raising and spending of.
We’re told that the money raised by the mansion tax will fund the NHS but if this tax is truly going to be sold on fairness, every penny it raises in London should be spent on London’s hospitals and healthcare.
But of course that won’t happen and Londoners will have to resign themselves to seeing even more of the city’s cash used to subsidise other regions.
