Ed Balls, the shadow chancellor, has tried to reassure London homeowners that his plans for a new mansion tax will not hit most of them by saying the threshold could be higher than £2m if house prices continue rising.
The proposal, giving greater detail than announced by Balls at the time of the party conference in September, will mean the number of properties paying the tax overall will not increase.
If prime property prices continue rising then by the time the tax is introduced, the starting point will be higher than £2m, Balls said.
Balls also pledged that those in the lowest band of the mansion tax, aimed at houses worth between £2m and £5m, would only play an extra £250 per month, or £3,000 a year, the same as the average top band of council tax.
In addition, people with incomes not large enough to pay higher or top rate of tax (those earning less than £42,000 a year) will be guaranteed a right to defer the charge until the property changes hands.
Balls added that he would try to get overseas owners of second homes in the UK to make a larger contribution.
Balls has acted after a backlash against the mansion tax among some wealthy Labour donors as well as prominent Labour MPs in London such as Tessa Jowell.
The mansion tax proceeds will contribute to a “time to care” NHS fund worth £2.5bn a year capable of funding an additional 20,000 nurses and 8,000 GPs by 2020. Writing in the London Evening Standard, Balls asserts: “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 £140m penthouse in Hyde Park – who has seen its value rise by around £6m in the past few months alone.”
The mansion tax remains popular in polls but it has been the subject of a vocal attack by donors and some newspapers, notably the Times.
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