Those close to Ed Miliband stress that if elected, Labour will introduce a mansion tax to pay for the return of a 10p tax rate. I’m told that ‘short of publishing the manifesto two years early, we couldn’t be any clearer’. This new 10p band will apply to the first thousand pounds of income, making it a £100 a year tax cut. (Although the Cameroon think tank Policy Exchange calculates that low-paid working families would actually only be 67p a week better off under this policy.)
The politics of the move, which has been in the works since Christmas, is fascinating. It is both a bold redistributive gesture and a rebuke to Gordon Brown, who scrapped the 10p rate. It also appealed to Miliband because it fits his whole critique of how politics works in this country. The fact that the Tories wrote to their donors soliciting funds on the grounds that they oppose a further property tax is grist to Miliband’s idea that powerful vested interests are distorting politics in this country.
There are several questions for the Tories now. First, do they reintroduce the 10p band in the Budget paid for by something other than a mansion tax? Second, do they embrace the fact that they are now the only major party opposed to a mansion tax. Based on past experience, I expect that they’ll argue that a mansion tax would require all properties to be revaluated, leading to the vast majority of households having to pay more council tax.
More Spectator for less. Stay informed leading up to the EU referendum and in the aftermath. Subscribe and receive 15 issues delivered for just £15, with full web and app access. Join us.