Property Tax Targets the Very Rich But Middle Class to Suffer

How do you know you’re super rich? According to the UK’s Liberal Democrats, it’s when you own a £1 million house. In September 2009, the party announced a new property tax on houses worth more than £1 million in order to raise enough money to provide income tax exemption to four million low-paid workers. At the time, all houses that fell into the million Pound and above bracket would have had to pay 0.5% property tax. Not surprisingly, the announcement was met with strong opposition and even some ridicule. The Haart estate agency group said: “This level of taxation is absurd and will only lead to disagreements about values. The Liberal Democrats have lost touch with the housing market and are using the property industry to address a taxation issue without fully considering the implications.”At the end of November 2009, after much criticism, the party amended the plan. Now properties worth £2 million and up will have to pay 1% property tax. Party leader, Nick Clegg, defends the amendment, saying: “It is not a U-turn. A U-turn would be abandoning the policy.” Apparently the Liberal Democrats have decided that only the very wealthy should pay “their fair share” so that the party “can offer tax cuts to everybody else”.Once again, not everyone is pleased with the amendment. Head of Research for Primelocation.com, Andrew Smith, says that most of the money raised by the property tax will come from London homeowners, many of whom can’t afford the extra financial burden. According to Primelocation.com’s Prime Index, central London will be hardest hit by the tax with 25% of homes in Kensington, Chelsea and Westminster valued at over £2 million and 10% of Hammersmith property and properties in Fulham and Camden also over the two million Pound mark. According to Zoopla, 10% of the total national property tax would come from Notting Hill property, where 1,814 homeowners would pay £105 million in tax.Estate agents believe that the property tax, or mansion tax as it’s become known, will adversely affect the property market, particularly in London, as it will drive down prices and property seekers will think twice about buying homes for anything over £1.9 million.