People who are struggling to pay the mooted mansion tax on Britain's most expensive homes could remortgage their houses to help meet the bill, the Liberal Democrat leader, Nick Clegg, suggested on Wednesday.
Clegg made the comment during his weekly phone-in on LBC radio when a caller identified as John from St John's Wood in London challenged the deputy prime minister over whether he should be forced to move home and take his children out of local schools to meet the bill on his house which had "skyrocketed" in value over 20 years to £5m.
The Lib Dem leader exposed a shaky knowledge of his party's flagship policy – or on-air nerves – when he first suggested that the caller might be able to defer payments until the house was sold, possibly after his death, something aides later said was unlikely to apply. The party's policy is to allow only pensioners to delay the bill this way. The caller had said he still earned a "reasonable" income and paid school fees for his children.
Clegg suggested the man, who said he had a "small" mortgage, could "leverage" his home. Aides later confirmed this was a reference to the possibility of taking out a further mortgage on the property. Challenged about why the caller should have to uproot his family to afford the tax, Clegg mounted a robust defence of the idea, despite concerns in some parts of the party that he is lukewarm about the policy to impose a 1% charge on the value of properties worth more than £2m.
"I think most people listening will think 'Well, that sounds perfectly reasonable,' particularly at a time when we are asking people on much lower incomes to make significant sacrifices," said Clegg.
Lib Dems and Labour, who last week also came out in favour of a mansion tax, privately dismissed the likelihood of there being widespread public sympathy for somebody living in a £5m house, and pointed out many people on benefits and low incomes were already making sacrifices owing to public spending cuts.
Polls have shown majority support for the idea among voters for all three main political parties. It is far more popular than a higher 50p income tax rate.
However, the phone-in exchange highlights the political difficulty of introducing any new tax in order to shift the tax burden from income to wealth, an idea with cross-party support.
The Lib Dem peer and one of the chief architects of the mansion tax, Lord Oakeshott, later defended the party's decision to reject higher council tax bands as a more practical alternative to the mansion tax. People in homes worth £1m or £2m would pay the same as those in houses worth, say, £50m, which would not be fair, he argued. "If you just put on one or two council tax bands, you can't make the superrich pay their fair share," said Oakeshott.
Clegg accused Labour of "playing games" by supporting the mansion tax. The opposition has said it wants an opposition day motion calling for the new tax, in the hope of splitting Lib Dems from their Conservative coalition partners.
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