Lib Dem changes on 'mansion tax'
The Liberal Democrats are to double the rate of their controversial "mansion tax" but impose it on fewer properties, the party announced in a damage limitation exercise.
Economics spokesman Vince Cable caused uproar, not least among colleagues he failed to consult properly, when he announced the 0.5% levy on all £1 million-plus homes in September.
The measure was designed to pay for income tax cuts for most people but raised concerns over the impact on people living in areas with high property prices.
Party leader Nick Clegg responded by saying the value threshold would be raised to £2 million-plus - taking up to 180,000 homes out of the equation. The remaining 70-80,000 properties will be hit with a 1% annual levy on the value, which is calculated to increase the income from the measure by nearly half to £1.7 billion.
According to party figures, the average price of all the properties which would now face the bill for the income tax cuts is £4.4 million.
Mr Clegg said it was right that "those with the broadest shoulders" should be asked to foot the bill for tax breaks for people who needed them and said the party's proposals were "the most radical, far reaching tax reform in a generation".
Under the plans, to be detailed at a London event, the property levy would help pay to take around four million low-paid workers and pensioners out of paying income tax altogether by raising the income tax threshold to £10,000 - also meaning a £700 cut for most workers.
The property levy is designed as a temporary measure until the party was able to implement its plans to scrap council tax and replace it with a local income tax.
Mr Clegg said: "If you want to know how committed a government is to fairness then look at its tax system. Gordon Brown has created a tax regime that forces some of the lowest earners in society to pay hundreds of pounds in tax they can't afford, while polluters and rich tax dodgers avoid paying their fair share.
"Meanwhile the Conservatives want tax cuts for millionaires, but say there might be tax rises for everyone else. Under our plans people won't pay a penny on the first £10,000 they earn. That would put £700 back in the pockets of the vast majority of tax payers, and take millions of people on low pay out of paying income tax altogether."
