Labour's mansion tax 'outdated and unnecessary'
02-26-2015
The Centre for Policy Studies says that the amount of stamp duty paid on a house sold in south-west London four years ago has increased by 405 per cent. 
Shadow chancellor Ed Balls
Ed Balls, the shadow chancellor, has said Labour will introduce a mansion tax on 'day one' if it wins power Photo: Paul Grover for The Sunday Telegraph
By Steven Swinford, Deputy Political Editor
Labour's mansion tax is already "outdated and unnecessary" as the government's stamp duty reforms mean that the buyers of the 1.6 per cent most expensive properties shoulder the burden for almost half of all stamp duty.
The Centre for Policy Studies said that 18,000 households pay 45 per cent of the stamp duty total due to recent reforms, increasing the tax burden on high value properties from £700 million in 2013 to £1.8 billion in 2015.
The think tank said an increase in the rate of the enveloped dwellings tax had also added £100 million a year to the tax paid by high value properties.
The research found the tax paid on a house sold in south-west London for £2.5 million has increased by 405% since 2009.
According to an analysis by Savills, the estate agents, a property bought for £1.75 million in 2009 generated £70,000 in stamp duty when it was sold.
Since then, the level of stamp duty for properties worth more than £2 million has risen from 4 per cent to an effective rate of 10 per cent under the government's latest reforms of the system.
Savills said that the same property sold this year would be worth £2.5 million and generate £213,750 in stamp duty.
The findings will be seized on by critics of Labour's plans, amid concerns that it will hit pensioners and other home owners who have seen the value of their property soar even though they do not earn much money.
Tim Knox, director of the Centre for Policy Studies, said: "For economic recovery, the UK does not need new taxes targeted at the aspirational, the successful and sometimes the fortunate.
"Rather, it needs lower, simpler taxes which encourage innovation and productivity and which stimulate, not penalise, wealth creation."
Lucian Cook, director of research at Savills estate agents, said: "The recent reforms of property taxation are raising as much from high value properties as any mansion tax.
"If, in addition to these reforms, a mansion tax were introduced after the next election, it would add a layer of complexity and unfairness into the tax system for residential property.
"On top of that, the economic impact of a mansion tax is impossible to quantify but would clearly be damaging, not least in seriously undermining the attraction of the UK (and London in particular) to overseas investors."
Under Labour's mansion tax, those earning between £2 million and £3 million will pay an extra £250 a month through the new tax, while those with more expensive properties will pay significantly more. Labour has pledged to use the £1.2 billion raised by the mansion tax to fund extra NHS staff.
The policy has been heavily criticised by both the Conservative and Labour MPs in London, who have raised concerns about the impact that it will have on their constituents.