Cable defends £1m ‘mansion tax’ plan

Author: By David Hughes and Trevor Mason, Press Association

The party’s treasury spokesman insisted that people with a low income who
lived in a home worth more than the threshold would be better off as a
result of other proposed changes in the tax system.

Mr Cable, normally a favourite within the party, has come under fire over the
proposal, which was not discussed with senior Liberal Democrats before it
was announced.

Among those reported to have been left out of the loop was local government
spokeswoman Julia Goldsworthy, who chaired the question and answer session
at the party conference in Bournemouth during which the subject was raised.

Amid fears the tax might adversely affect pensioners or those on low or medium
incomes who had seen the value of their home soar as a result of property
price rises, Mr Cable said they may actually benefit.

He said: “We are talking about a very small minority of the housing stock, 1%
or less.

“They could actually be significantly better off because if they have a very
low income either as low paid workers or average paid workers or if they are
pensioners, they could … be lifted out of tax altogether.

“The whole purpose of the policy is to impose some additional taxes, actually
quite modest, on those who are very wealthy and use it to cut taxes at the
bottom end.”

He added: “Even in this very small category, this 1% of properties or less,
there may be people who are asset-rich wealthy but have very low income,
that can happen and does happen.

“Even though it is a small number of people we need to be sensitive to their
problems.

“There are ways of dealing with it, one of which we suggest is that if they
are entitled to council tax benefit already then they would be entitled to
property tax benefit in respect of these payments.

“The second is that if there are any obligations that people can’t meet
because they don’t have the income it can be rolled over until eventually
the house is sold and deducted from the price of the property.

“That way people can live in complete security but nonetheless make a
contribution to a tax cutting approach, because they have substantial
personal wealth, to a tax cutting approach which overwhelmingly benefits
very large numbers of people on low incomes.”

The party estimates about 250,000 homeowners will be hit by the 0.5% annual
levy on the value of properties worth more than £1 million.

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