Members of Parliament will not have to pay Labour’s proposed Mansion Tax. Instead, the bill will be picked up by taxpayers, as the tax on homes worth over £2m will be claimable on expenses, the Express has revealed.
Under current rules, MPs are allowed to claim up to £8,850 for expenses related to their second home, including utilities bills, internet connection, TV license and council tax. It is understood that the mansion tax payment, which Ed Balls has estimated at £250 a month for a property worth between £2m and £3m, will also fall into that category.
“Given that mansion tax doesn’t exist yet we will need to look into this. But the assumption is that any taxes on property would be covered by expenses,” said a source from the Independent Parliamentary Standards Authority (IPSA) which oversees MPs expenses.
Campaign groups have slammed MPs for attempting to foist a measure on the British people that they themselves will be able to avoid. Dia Chakravarty, Political Director of the TaxPayers’ Alliance said “The mansion tax is a terrible idea.
“Taxpayers will be outraged at another instance of our politicians being exempt from the rules and regulations they set for ordinary people. If they lived by the same rules they set us perhaps we’d see fewer examples of headline-grabbing, counter-productive ideas like the Mansion Tax coming out of Westminster.”
Labour leader Ed Miliband himself lives in a house worth £2.6m in the salubrious London area of Hampstead Heath. Yet he claims that if voted into power next year, Labour will raise £2.5bn between the new tax and levies on tobacco firms to pay for the NHS.
His neighbours in leafy north London are less than impressed. Red Szell, a blind writer who lives near the Labour leader has said that he will no longer vote Labour. He bought his house in 2000 and has since seen it quadruple in value, rocketing up to £3m.
“Neither my wife nor I are currently employed. We are both writers – we make money when we can,” said Mr Szell, who lives in the house with his family. “This has been our investment, we didn’t buy shares in the dot com bubble.
“To be honest, it feels like we have been lumped into the same group as corporations who don’t pay their taxes, who are doing something deliberately to deprive people of money.
“I have voted Labour in the past but there is no way I would vote Labour now.”
Natasha Mitchell, who lives over the road from Mr Miliband agreed “The vast majority of the properties to which the mansion tax will apply around here are not mansions at all,” she said.
“I would be really interested to know if Ed Miliband has given thought to how in reality this tax would affect his own community.
“The government should do better to collect more taxes from large global firms who are profiting from trading in the UK.”
The tax will apply to all homes worth over £2m, calculated in a band scheme by analysing recent sales. However, it is not yet clear what rate the tax will be set at. Last week, the Financial Times reported that shadow chancellor Ed Balls assured voters that the tax would not hit “modest” properties, and that owners who earn less than £42,000 a year could have the option of deferring the tax until they sell the property, or until death, at which point the family of the occupier would have to pay the tax when they sold the house. He also suggested that homes worth between £2m and £3m would incur a £3,000 a year charge.
However, property firm Savilles has calculated that £3,000 a year charged to the 40,000 properties that fall within that bracket would only raise £120m, falling well short of the £1.2bn Labour intends to raise. Consequently, homes worth over £3m would have to pay at least £19,000 a year if Labour were to reach their target.