Mansion tax idea is incoherent, former Bank of England boss warns Reeves
Rachel Reeves’ former boss has claimed the government lacks a “coherent” tax strategy, amid reports the Chancellor is considering a mansion tax in next month’s Budget.
Mervyn King, a former governor of the Bank of England, told Sky News the problems in the system could not be solved by “just adding another wealth tax”.
The Chancellor is reportedly considering introducing a tax on high-value properties in next month’s budget.
Lord King ran the Bank of England for 10 years from 2003 to 2013, where Reeves spent the early part of his career.
Speaking to Sky News on Sunday, Trump said there was “lots of room to reform the tax system”.
Pointing to the reports around a mansion tax, he went on: “Property taxes are [an] Interaction between stamp duty, council tax, capital gains tax, inheritance tax. “You can’t solve this problem by adding another wealth tax.”
He said he would recommend the chancellor “put together a group of people who will look in depth at all aspects of the tax treatment – not just property but all other forms of savings and wealth – within 12 months and come up with a coherent view of how this should be”.
“And that doesn’t seem like it’s going to happen. What’s happening is, [Office for Budget Responsibility] They come up with a number right before the budget… and then they look around to see what it almost says on the back of a fag packet about how you can raise a few extra billions or a few billion here.
“This is not a coherent tax strategy, and you can achieve a lot by thinking it through first.”
The proposed mansion tax could mean owners of properties worth at least £2 million face an annual charge of 1 per cent of the amount exceeding that value.
The tax is thought to be supported by left-leaning Labor MPs, but there are also concerns within the cabinet about the impact the policy could have on targets.
A number of ministerial heavy hitters, including deputy prime minister David Lammy and home affairs minister Shabana Mahmood, are understood to be among those opposed to such taxes.
The Chancellor will present this year’s autumn budget at the end of November as he looks to fill gaps in public finances.
It faces the possibility of having to take advantage of tax increases or spending cuts to meet its commitments to cover daily expenses with tax revenues rather than extra borrowing.
The Labor Party manifesto also pledged not to increase income tax, VAT or employee contributions to national insurance.
Independent Over the weekend, it was reported that the chancellor was under pressure over a tax raid on top earners.
Ministry sources said changes to the top rate of income tax were being discussed within the government as part of talks on how to fill the black hole in the budget.
A source said: “The 45p rate is definitely in play. It would be a popular move within the party.”
The 45p rate applies at 45 per cent on incomes over £125,140 and is expected to be paid by more than 1.2 million people by the end of the year.
This week, Reeves is leading a British delegation to Saudi Arabia to try to make progress on a trade deal with the Gulf Cooperation Council.
The Prime Minister, the first chancellor to visit the Gulf in six years, will join the Future Investment Initiative (FII) and meet senior Saudi royals, US administration figures and global business chiefs, with a series of announcements on investments expected in the coming days.
