Business secretary Vince Cable has signalled that he is prepared to risk further rifts in the coalition over the prospect of a controversial mansion tax after promoting a mass email campaign calling for people to support the idea.
Cable's desire to keep the Liberal Democrat flagship policy alive means the debate about taxing the wealthy, the toxic issue that threatens to widen schisms in the coalition, will continue to be a key battleground between the Tories and Lib Dems in the months ahead.
An email sent last month by Cable to thousands of recipients called for people to support his campaign to end what he called an "unfair and inefficient" tax system.
The timing of Cable's email – soon after the chancellor, George Osborne, rejected the idea following the Lib Dems' conference last month – is significant. It suggests the Lib Dems are refusing to give up the idea despite widespread Tory opposition. "People on modest incomes are paying their fair share of tax while the super rich can too easily avoid paying their share," Cable said in his email.
"It is a particular scandal that some of the world's wealthiest people who own property in the UK worth millions pay virtually the same council tax as owners of a modest family home."
Lib Dem leader Nick Clegg was thought to have gone cold on the idea but is now said to be backing the tax, according to party insiders.
Cable told supporters that properties valued at more than £2m would pay a tax of 1%. It is estimated some 0.5% of the highest-priced properties would be hit by the tax.
Lib Dem peer Lord Oakeshott pointed out that under the current system the new owner of Cambridge House at 94 Piccadilly, one of London's most prestigious properties, which is expected to be sold for £200m, would pay £26 a week in council tax. Under a mansion tax they would pay £1.98m a year.
"This palace's new owner will pay just £26.33 a week," Oakeshott said. "That's barely a fiver more than a glass of champagne in the Ritz over the road."
Supporters of the tax say it would be impossible to dodge – pointing out that a mansion cannot be hidden offshore. Lib Dems say it is the only way to target the super rich non-dom and non-resident tax dodgers whom they accuse of forcing up central London house prices.
But there is widespread opposition to the plan among Tories and their supporters in the City. Cable's email notes: "There is plenty of opposition from top investment bankers who would have to pay more tax. And the Tories don't like it either; it will hit some of their friends."
The Lib Dems claim polls show that this idea is very popular. But the Tories believe the tax is only the beginning and is part of a wider and unwarranted assault on the wealthy.
Last month Osborne attacked the tax saying "it would be sold as a mansion tax. But once the tax inspector had his foot in the door you'd soon find most homes in the country labelled a 'mansion'."
The chancellor warned it would hit homes "people have worked hard to afford and already paid taxes on" adding it was "not a mansion tax it's a homes tax and this party of home ownership will have no truck with it."
Some 12,000 people have signed up to the Fairer Tax campaign promoted by Cable. "The mansion tax is still very much in the mix. It's very much in play," Oakeshott said.
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