Commenting on Ed Miliband’s expected announcement that will propose a mansion tax to further fund the NHS , the Adam Smith Institute’s Head of Policy, Ben Southwood, said:
Labour’s proposal to tax expensive houses and hypothecate the funds for the NHS is bizarre.
Although property value taxes are among the least inefficient taxes, and shifting the burden from costlier taxes like stamp duty land tax, corporation tax and income tax is a good idea, we already have a perfectly good property tax system: council tax.
The only problem with the council tax system is that, for political reasons, it has not been revalued since 1993, massively distorting the system. It makes no sense to create a whole new property tax system at an arbitrary £2m cutoff point: instead, council tax should be revalued and remodeled along more progressive lines, to reduce the tax burden on people in less expensive properties.
Instead of trying to grab more cash for central government, Ed Miliband should be focused on sorting out the massive distortions in the property tax system instead.
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The Adam Smith Institute is an independent libertarian think tank based in London. It advocates classically liberal public policies to create a richer, freer world.