A mansion tax will be fair, simple and pay to save the NHS – my article in the Evening Standard

Politics is about choices. And over the coming months the country faces a big choice about the future of our National Health Service. Here in London and across the country our NHS is going backwards: it’s getting harder to see a GP, nurses have been cut and waiting lists are going up. There’s a looming crisis as the pressure on NHS budgets gets tighter in the years ahead.

So the choice is either to allow the NHS to continue going backwards, or accept that — alongside reforms — the NHS needs more funding.

Labour will not duck this challenge and, following the party conferences, we are now the only party with a plan to save and transform the NHS.

If we win the election we will raise £2.5 billion a year, on top of the Tory spending plans we inherit, for an NHS Time to Care Fund. This will support an additional 20,000 nurses and 8,000 GPs. And, as Ed Miliband announced this weekend, our extra funding means we will guarantee patients in England will wait no longer than one week for cancer tests and results by 2020.

Alongside a levy on tobacco firms, action to tackle tax avoidance and close loopholes, £1.2 billion of this much-needed revenue will be raised through a tax on prime value properties worth more than £2 million today — less than 0.5 per cent of homes in our country.

When working people are already paying more and have seen their wages fall by an average of £1,600 a year since 2010 I believe it is right to ask those who have the most to make a bigger contribution.

Because it cannot be fair that the average person pays 390 times more in council tax, as a percentage of the value of their property, than the billionaire buyer of a £140 million penthouse in Hyde Park — who has seen its value rise by around £6 million in the past few months alone.

As I wrote on this page earlier this year, a tax on the highest-value properties must be done in a fair, sensible and proportionate way. Ordinary Londoners should be protected and wealthy foreign investors must finally make a proper tax contribution in this country.

So this is what we propose.

First, we will guarantee that more modest properties are not brought into the scope of the tax. The Tories have been spreading desperate smears that properties worth far less today — even £1 million — will end up paying. This is simply untrue.

As I said earlier this year, we will raise the starting threshold as prices rise. And rather than raising it in line with overall inflation, we will do so in line with the average rise in prices of high-value properties over £2 million. This will ensure that the number of properties paying the tax will not increase. If prime property prices continue rising then by the time the tax is introduced the starting point will be higher than £2 million.

Second, the tax will be administratively simple. A banded system means valuations will not be needed for most properties as it will be clear which band — for example £2 million-£3 million — the property falls into. As with the Government’s new tax on properties bought through companies, owners will be able to submit a self-valuation to HMRC.

Third, as we have always said, the tax will be progressive. We will ensure those owning properties worth £2 million-£3 million will only pay an extra £250 a month through this new tax — the same as the average top band of council tax. Owners and investors in properties worth tens of millions of pounds should make a much bigger contribution. And we will look at asking overseas owners of second homes in the UK to make a larger contribution than people living in their only home.

And finally, as I wrote on this page in June, we will protect the small minority of people who are asset-rich but cash- poor. Long-standing residents who now find themselves living in high-value homes but do not have an income high enough to pay the higher or top rate of income tax — in other words earn less than £42,000 a year — will be guaranteed the right to defer the charge until the property changes hands.

So a tax on the highest value properties will be done fairly and carefully to help fund our NHS for the future. Because promises have to be paid for. David Cameron is taking people for fools when he promises £7 billion of tax changes without saying where the money is coming from — either in other tax rises like VAT or bigger cuts to public services.

In contrast, Labour won’t make any promises without saying where the money is coming from. There will be no additional borrowing to pay for spending or tax commitments.

But we will make different choices. So we will introduce a lower 10p starting rate of tax and pay for it by scrapping the so-called married couples’ allowance, which won’t actually help most married couples or most families. We will raise the bank levy to pay for an expansion of free childcare for working parents. We will scrap elected police commissioners to help protect frontline police officer numbers.

To help get the deficit down fairly we will reverse the Tory tax cut for millionaires, stop paying the winter fuel allowance to the richest pensioners, raise child benefit by just one per cent for two years and cut ministers’ pay by five per cent.

And yes, we will also use a tax on the highest value properties to help save our NHS. It’s no surprise the Tories are opposing this. Since 2010 they have chosen to give the top one per cent of earners a £3 billion a year tax cut, while working people are paying more. Now they want to make three million working people worse off by cutting their tax credits again — a strivers’ tax — while opposing a mansion tax to save the NHS.

Labour will not allow our NHS to continue going backwards. That is why we are making a difficult but fair choice with this tax. The future of our NHS depends on it.

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Posted October 20th, 2014 by Ed